THE  GIFT  OF 

MAY  TREAT  MORRISON 

IN  MEMORY  OF 

ALEXANDER  F  MORRISON 


Protection  and  Progress. 


Protection  and  Progress 


A  STUDY  OF  THE  ECONOMIC  BASES  OF 
THE    AMERICAN    PROTECTIVE    SYSTEM 


BY  JOHN  P.  YOUNG. 

Author  of  "  The  Manufacturing  Industries  of  Japan"  and 
"  Bimetallism  or  Monometallism." 


Chicago  and  New  York: 
RAND,  McNALLY  &  COMPANY, 

publishers. 


Copyright,  1900,  by  Rand,  McNally  &  Co. 


? 


<0 

«: 
2 
u. 
O 

t 


HP 


CONTENTS. 


chapter  page 

Introduction 9 

I.    Growth  of  English  Industry 25 

II.     Balance  of  Trade  Theory 39 

III.     Free  Trade  in  England 59 

I  V.    Foundation  of  English  Supremacy 78 

J^  V.    England  the  World's  Workshop 91 

^  VI.     International  Friction  114 

VII.     Waste  of  Energy 128 

VIII.     Protection  Promotes  Economy 148 

Q  IX.     Internal  Trade  173 

2  X.    Agriculture  and  Economics 196 

O  XI.    Industrial  Development  218 

^  XII.     Labor  Efficiency 238 

<  XIII.     Labor-Saving  Devices  266 

XIV.     Production  and  Consumption 292 

XV.     External  Trade   320 

XVI.     Industrialism  in  Asia 349 

XVII.     Formation  of  Trusts 375 

XVIII.     Two  Kinds  of  Consumers 406 

XIX.     Workingmen  and  Wages 444 

XX.     Equalization  of  Condition 485 

XXI.     Cobdenism  a  Failure 525 

XXII.     Triumph  of  Protection 560 


433054 


INTRODUCTION. 

The  purpose  of  the  writer  in  presenting  what  he  con- 
ceives to  be  the  true  object  of  the  protective  pohcy  is  to 
combat  the  erroneous  idea  that  the  only  useful  function 
of  the  system  of  protection  is  to  assist  in  the  establishment 
of  a  domestic  manufacturing  industry.  This  opinion  is 
now  freely  expressed  by  authors  who  concede  that  protec- 
tion performs  a  valuable  service  to  a  nation  by  artificially 
calling  into  existence  industries  whose  growth  under  so- 
called  natural  conditions  would  have  been  slow,  perhaps 
impossible ;  but  who  contend  that  when  this  result  has  been 
accomplished  the  industries  created  should  be  left  to  work 
out  their  destinies  under  a  system  of  unrestrained  com- 
petition. 

Those  who  hold  to  this  view  have  been  led  astray  by  the 
false  teachings  of  professional  economists  who  have  failed 
to  perceive  that  no  system  of  political  economy  which 
merely  corisiders  the  present  can  be  sound.  That  this  is  a 
fundamental  defect  of  the  doctrines  of  the  Manchester 
school  will  be  demonstrated  in  the  following  pages. 

It  will  be  conclusively  shown  that  the  teachings  and 
practices  of  the  British  followers  of  Cobden,  although  hav- 
ing for  their  professed  object  the  cheapening  of  production 
and  the  consequent  increase  of  consumption,  had  they  been 
accepted  and  imitated  by  the  world,  would  have  resulted 
in  an  arrest  of  industrial  progress  and  the  ultimate  defeat 
of  the  purpose  which  free  traders  assert  is  the  sole  aim 
of  the  policy  advocated  by  them. 

It  will  be  made  clear  that  the  most  distinguished  ex- 


lo  INTRODUCTION 

ponents  of  the  doctrines  of  the  Manchester  school  con- 
stantly disregard  the  fact  that  present  cheapness  may  result 
in  ultimate  dearness,  and  that  they  completely  ignore  the 
necessity  of  considering  the  future. 

If  there  is  a  free  trader  who  has  pointed  out  that  the 
welfare  of  the  consumer  in  time  to  come  is  as  much  to  be 
regarded  by  the  economist  as  that  of  the  consumer  of  the 
present  day,  his  writings  have  not  received  much  considera- 
tion. Those  who  have  borne  the  Cobden  banner  in  the  front 
of  the  fray  have  certainly  not  done  so,  for  their  writings 
present  an  uninterrupted  advocacy  of  a  system  which  has 
for  its  object  immediate  gain  at  the  expense  of  posterity. 

That  this  accusation  is  well  founded  will  be  admitted 
by  every  one  capable  of  recognizing  that  the  inevitable  result 
of  acting  up  to  the  theory  of  "buying  in  the  cheapest  and 
selling  in  the  dearest  market"  is  to  promote  the  wasteful 
system  of  unnecessary  transportation,  which  is  carried  on 
by  a  useless  expenditure  of  human  energy  and  the  uncalled 
for  destruction  of  an  immense  proportion  of  the  world's 
store  of  fuel. 

The  cheapest  market  for  the  time  being  must  necessarily 
be  that  in  which  an  industry  is  already  established.  No 
matter  how  great  the  resources  of  raw  materials,  or  how 
abundant  the  facilities  for  converting  them  into  finished 
products  may  be  in  an  undeveloped  country,  in  practice  it  is 
impossible  to  utilize  them  profitably  unless  artificial  aid  is 
extended  to  overcome  the  advantages  enjoyed  by  those 
carrying  on  industries  in  older  lands. 

Had  the  free  trade  theory  that  it  is  the  part  of  wisdom 
to  buy  in  the  cheapest  market  been  generally  accepted  it 
would  have  resulted  in  the  arrest  of  that  almost  simul- 
taneous universal  progress  which  is  one  of  the  most  con- 
spicuous features  of  the  closing  years  of  the  nineteenth 
century.  Had  the  advice  of  Cobden  and  his  adherents  been 
followed  by  Americans  and  other  peoples  the  world  would 


INTRODUCTION  il 

have  witnessed  the  singular  spectacle  of  one  nation  becom- 
ing its  workshop.  Had  considerations  of  the  immediate 
benefit  of  the  consumer  prevailed  England  must  inevitably 
have  maintained  her  industrial  supremacy,  for  there  is  no 
doubt  that  it  would  have  been  impossible  for  rivals,  if  the 
disposition  to  engage  in  rivalry  could  exist  under  such 
circumstances,  to  produce  as  cheaply  as  that  country. 

That  the  advantages  enjoyed  by  the,  country  with  a 
well  developed  manufacturing  industry  would  have  been 
indefinitely  retained  under  a  system  of  exchange  which 
discouraged  efforts  at  competition  cannot  be  doubted.  To 
illustrate :  it  would  have  been  impossible,  if  the  theory 
that  it  is  wise  to  buy  in  the  cheapest  market  had  prevailed 
in  the  United  States,  for  that  country  to  have  created  a 
great  iron  and  steel  industry ;  for  at  no  time  until  within  the 
past  three  years  have  Americans  been  able  to  manufacture 
those  products  as  cheaply  as  Great  Britain. 

It  ought  not  to  be  difficult  to  perceive  that  the  present 
abundance  and  cheapness  of  iron  and  steel  is  wholly  due  to 
the  refusal  of  the  people  of  protected  countries  to  consider 
immediate  cheapness  as  of  paramount  importance.  Deliber- 
ate defiance  of  the  Cobdenite  tenet  that  it  is  wise  to  buy  in 
the  cheapest  market  has  called  into  existence  rival  iron  and 
steel  industries  which  cause  those  of  the  country  once 
supreme  in  this  department  of  manufacture  to  shrink  in 
importance.  At  the  beginning  of  the  free  trade  era  Great 
Britain  produced  more  than  half  of  the  pig  iron  consumed 
by  the  world ;  fifty  years  later  she  produced  less  than  one- 
fourth.  In  1840  Great  Britain  mined  3,500,000  tons  of 
iron  ore  and  the  rest  of  the  world  only  2,900,000  tons ;  in  1894 
the  Iron  ore  production  of  the  United  Kingdom  was  12,400,- 
000  tons,  and  that  of  the  other  manufacturing  countries 
reached  the  colossal  aggregate  of  40,800,000  tons.  The  out- 
put of  iron  ore  in  the  United  States  was  500,000  tons  in 
1840 ;  in  1894  it  had  increased  to  17,000,000  tons. 


12  INTRODUCTION 

It  is  impossible  to  escape  the  conclusion  these  figures 
suggest.  They  clearly  indicate  the  cause  of  the  present 
cheapness  and  extended  consumption  of  iron  and  steel. 
Production  on  an  enormous  scale  has  compelled  the  result, 
and  this  production  is  obviously  due  to  the  disregard  of  the 
advice  to  buy  in  the  cheapest  market.  Had  Americans  and 
Germans  been  frightened  by  the  Cobdenite  bogie  of  dear- 
ness  they  would  still  be  dependent  upon  the  British  for 
their  supplies  of  iron  and  steel.  The  restricted  resources 
of  the  English  and  the  practical  monopoly  which  they  en- 
joyed would,  under  such  circumstances,  have  kept  up 
prices,  and  the  result  would  have  been  permanent  dearness, 
although  Great  Britain  might  have  remained  the  cheapest 
producer  for  an  indefinite  period. 

The  strength  of  the  policy  of  protection  is  due  to  the 
perception  that  it  promotes  true,  not  merely  nominal,  cheap- 
ness. Protection  could  never  have  made  headway  if  it  had 
operated  to  make  things  actually  and  permanently  dearer. 
Its  economic  basis  is  the  elimination  of  wastefulness.  By 
decentralizing  industry  it  has  vastly  promoted  its  growth. 
The  bringing  of  the  consumer  and  producer  together,  which 
is  the  object  of  all  consistent  protectionists,  promotes  con- 
sumption and  prevents  waste  of  energy  and  the  source 
of  energy,  fuel.  Because  it  accomplishes  this  latter  result 
it  must  always  hold  first  place  in  any  system  of  economy 
which  does  not  disregard  the  future. 

Cobdenism  was  foredoomed  because  its  successful  work- 
ing depended  upon  the  violation  of  true  economic  laws. 
It  set  up  the  theory  that  the  world  would  be  benefited  by 
concentrating  manufacturing  operations  in  one  quarter  of 
the  globe.  A  temporary  advantage  due  to  adventitious 
circumstances  was  mistaken  for  evidence  that  the  British 
people  were  more  capable  than  others.  Acting  on  this 
erroneous  idea  a  system  of  economics  was  elaborated  by 
the  Manchester  school  which,  had  it  been  accepted,  must 


INTRODUCTION  13 

inevitably  have  prevented  numerous  peoples  passing  the 
stage  of  homogenity.  Heterogenity  would  have  been  im- 
possible under  a  system  of  industry  which  proposed  to  rele- 
gate some  nations  to  the  position  of  producers  of  rude 
products  for  others  to  convert  into  finished  articles. 

Had  the  doctrine  advanced  by  the  followers  of  Cobden 
prevailed  there  must  have  been  a  perpetual  waste  of  energy. 
Could  mankind  generally  have  been  induced  to  believe  that 
it  is  unwise  to  make  temporary  sacrifices  to  diversify  in- 
dustry England  would  have  indefinitely  continued  the  waste- 
ful process  of  transporting  raw  materials  from  all  parts  of 
the  world  to  be  worked  up  into  manufactured  articles  by 
the  people  of  two  islands,  whose  capabilities  experience  has 
demonstrated  are  in  nowise  greater  than  those  of  the  peo- 
ples of  numerous  other  nations. 

It  ought  to  require  no  argument  to  establish  that  it  is 
wasteful  to  transport  raw  cotton  to  England  to  be  manu- 
factured for  American  consumption  in  the  face  of  the  con- 
cession made  by  free  traders  that  the  labor  efficiency  of 
operatives  in  this  particular  industry  is  greater  in  the 
United  States  than  in  the  United  Kingdom.  If  it  is  true 
that  there  is  no  natural  obstacle  in  the  way  of  manufacturers 
of  cotton  textiles  in  the  United  States  producing  goods 
vieing  in  quality  with  those  turned  out  by  English  mills, 
sound  economy  demands  that  they  should  be  produced  in 
this  country,  not  only  for  consumption  by  Americans  but  as 
well  for  Englishmen. 

From  the  standpoint  of  the  economist  who  regards  the 
elimination  of  wastefulness  as  the  most  important  thing 
to  be  considered  the  attempt  to  perpetuate  cotton  manufac- 
turing in  England  will  always  be  viewed  as  an  effort  to 
maintain  an  exotic  industry.  No  country  incapable  of  pro- 
ducing the  raw  material  required  in  the  prosecution  of  an 
industry  can  be  regarded  as  naturally  adapted  to  its  man- 
ufacture, and  unless  the  inhabitants  of  a  country  in  which  a 


14  INTRODUCTION 

raw  material  is  not  indigenous  are  superior  in  skill  to  those 
who  have  the  raw  material  in  abundance  they  cannot  hope 
to  successfully  compete  when  the  latter  have  overcome  the 
disadvantages  inherent  to  the  establishment  of  a  new  in- 
dustry in  a  new  country. 

It  is  the  function  of  protection  to  destroy  the  artificial 
advantages  resulting  from  accumulations  of  capital  and 
those  which  result  from  prior  occupation  of  fields  of  in- 
dustry. In  performing  this  work  protection  is  gradually 
reducing  the  wastefulness  involved  in  useless  carriage.  In 
this  respect  it  presents  a  complete  antithesis  to  free  trade, 
which  promotes  this  sort  of  wastefulness  by  encouraging 
the  unnecessary  hauling  to  and  fro  of  raw  and  finished 
articles.  The  inevitable  outcome  of  the  general  adoption 
of  protection  must  be  the  creation  of  many  centers  of  in- 
dustry instead  of  one  or  two.  The  result  of  this  practical 
conversion  of  the  whole  world  into  a  workshop  will  be  an 
enormous  gain  to  mankind. 

The  far-reaching  consequences  of  the  elimination  of  the 
waste  which  the  general  adoption  of  the  Cobden  system 
would  have  entailed  are  easily  apprehended  when  we  reflect 
that  the  world's  supply  of  that  great  source  of  energy,  coal, 
is  not  inexhaustible.  We  need  not  accept  the  pessimistic 
opinions  which  in  some  cases  are  gloomy  enough  to  make 
the  subject  one  of  present  concern  in  countries  like  Eng- 
land, but  we  are  forced  to  admit  that  within  a  very  brief 
period,  as  periods  are  measured  in  history,  the  available 
supply  of  coal  will  be  exhausted. 

In  an  article  on  "European  and  American  Bridge  Con- 
struction," which  recently  appeared  in  the  Engineering 
Magazine  (September,  1898),  the  writer,  Gustav  Linden- 
thai,  stated  that  "authorities  estimate  that  the  coal  fields 
of  Europe  and  America  will  last  from  four  hundred  to 
fifteen  hundred  years  longer.  Those  of  Asia  and  Africa 
are    not    yet    well    known.      Measured    by    the    Egyptian 


INTRODUCTION  15 

pyramids,"  he  says,  "the  steel  age  will  therefore  be  of  short 
duration,  but  the  most  glorious  in  the  history  of  mankind." 

If  the  assumption  is  sound  that  "mineral  fuel  is  the  only 
great  source  of  power  which  can  be  used  for  the  reduction 
of  iron  ores,"  it  is  extremely  doubtful  whether  the  future 
historian  will  extol  the  achievements  of  those  who  are  so 
lavishly  wasting  it.  He  will  more  probably  condemn  them 
as  exhibitions  of  selfish  disregard  of  the  rights  of  posterity 
and  of  incapacity  to  make  the  best  use  of  the  gifts  of 
nature. 

If  it  is  a  blunder  bordering  on  the  criminal  to  heedlessly 
strip  the  earth  of  its  forests,  which  human  care  and  energy 
may  restore,  what  may  we  call  the  unnecessary  destruction 
of  the  store  of  mineral  fuel,  which  can  never  be  replaced? 
This  is  a  question  which  will  come  home  to  posterity,  and 
when  the  answer  is  framed  it  will  embrace  an  awful  indict- 
ment against  a  false  economic  system  which  taught  men  to 
deliberately  waste  an  indispensable  economic  assistant  pro- 
vided by  nature  which  can  never  be  replaced. 

That  Cobdenism  is  responsible  for  waste  of  this  char- 
acter is  easily  demonstrable,  and  that  the  waste  is  on  a 
colossal  scale  and  is  constantly  accelerated  by  the  system 
which  has  for  its  shibboleth  "buy  in  the  cheapest  market" 
will  be  shown  in  the  following  chapters.  It  will  be  made 
clear  that  an  enormous  proportion  of  the  coal  annually 
mined  in  Europe  and  other  parts  of  the  world  is  consumed 
in  the  unnecessary  moving  to  and  fro  of  raw  materials  and 
finished  articles  and  in  supplying  the  motive  power  of  the 
vast  navies  of  modern  times,  which  are  admittedly  main- 
tained for  the  purpose  of  protecting  a  forced  and  unnatural 
external  trade. 

According  to  recent  estimates  the  coal  output  of  the 
year  1897  was  574,532,600  tons.  It  would  be  impossible 
to  even  approximately  state  how  much  of  this  enormous 
total  is  absolutely  wasted,  but  some  conception  of  the  magni- 


i6  INTRODUCTION 

tilde  of  the  unnecessary  consumption  may  be  obtained  from 
a  consideration  of  the  following  facts : 

Nearly  two-thirds  of  the  raw  cotton,  about  one-third 
of  the  wheat,  a  large  quantity  of  the  corn,  and  similar  pro- 
portions of  the  ruder  productions  of  the  United  States  are 
unnecessarily  moved  to  England  and  other  countries  in 
vessels  propelled  by  steam  generated  by  coal.  Obviously 
the  fuel  thus  consumed  must  be  regarded  as  an  economic 
waste,  as  it  has  been  demonstrated  that  cotton  textiles  and 
other  finished  articles  can  be  equally  well  produced  in  prox- 
imity to  the  source  of  raw  materials.  This  being  true,  there 
can  be  no  economic  justification  for  moving  the  raw  mate- 
rials of  manufacture  or  the  food  products  required  to  feed 
operatives  in  countries  remote  from  the  places  where  the 
raw  materials  and  food  are  produced.  If,  instead  of  ship- 
ping abroad  the  raw  materials  and  food  products  of  the 
United  States,  they  were  worked  up  into  finished  articles 
in  this  country,  and  if  the  food  now  exported  was  consumed 
by  American  workingmen,  perhaps  two-thirds  of  the  coal 
now  required  to  propel  the  ships  plying  between  American 
ports  and  other  parts  of  the  world  would  be  saved.  The 
tonnage  required  to  move  finished  articles  from  countries 
where  raw  materials  are  found  in  abundance  to  lands  where 
they  cannot  be  produced  would  be  insignificant  by  compar- 
ison with  that  now  employed  in  useless  transportation. 
This  illustration  applies  with  varying  force  to  the  move- 
ment of  products  between  other  countries.  The  unnecessary 
shipment  to  and  fro  of  competing  articles,  which  is  chiefly 
due  to  the  failure  of  exporters  of  rude  products  to  diversify 
their  industries,  is  as  much  a  feature  of  the  intercourse 
between  other  nations  as  it  is  of  the  trade  of  this  with  other 
countries. 

In  1897  the  United  Kingdom  mined  202,129,931  tons  of 
coal.  Of  this  quantity  154,572,035  tons  were  retained 
for  domestic  consumption,  37,102,138  tons  were  exported 


INTRODUCTION  17 

to  foreign  countries  and  10,455,758  tons  were  shipped  for 
the  use  of  steamers  engaged  in  the  foreign  trade.  To  segre- 
gate the  quantities  used  for  developing  energy  from  those 
consumed  for  warmth  and  kindred  purposes  would  be  im- 
possible, but  it  may  be  assumed  that  so  much  of  the  154,- 
572,035  tons  as  is  employed  in  manufacturing  textiles  and 
other  articles  for  export,  which  could  be  equally  well 
made  in  the  countries  where  the  raw  materials  of  manufac- 
ture are  or  could  be  produced,  is  sheer  waste.  All  that  pro- 
portion consumed  in  providing  for  the  domestic  comfort 
of  workingmen  who  would  be  more  profitably  employed 
if  their  services  were  made  use  of  in  factories  situated  near 
the  base  of  supplies  of  raw  and  food  products  may  also  be 
set  down  as  economic  waste.  In  the  same  category  must 
be  placed  all  that  part  of  the  37,102,138  tons  shipped  abroad, 
which  goes  to  countries  having  coal  measures  whose  inhab- 
itants neglect  or  are  unable  to  develop  them  because  the 
superior  equipment  and  great  capital  of  the  British  coal 
miners  make  competition  impossible.  The  10,455,758  tons 
shipped  for  the  use  of  steamers  engaged  in  the  foreign 
trade  and  for  navies  can  be  said  to  have  been  profitably 
employed  only  when  it  supplied  the  motive  power  for  mov- 
ing non-competing  products.  Great  Britain  occupies  a  pre- 
eminent position  as  a  coal  producer  and  exporter,  but  the 
illustration  employed  applies  equally  to  other  countries 
which  in  the  same  manner  wastefully  consume  their  stores 
of  fuel. 

This  present  wastefulness,  attributable  to  the  pursuit 
of  a  false  economy  which  elevates  immediate  above  per- 
manent cheapness,  necessarily  entails  future  waste  of  human 
energy  and  fuel.  The  consequences  of  the  blunder  are  only 
in  part  visited  upon  its  perpetrators.  In  time  to  come,  if  a 
manufacturing  industry  is  to  be  carried  on  in  the  United 
Kingdom  the  current  of  coal  carriage  must  be  reversed, 
and  instead  of  mineral  fuel  being  carried    out    of    Great 


i8  INTRODUCTION 

Britain  it  will  have  to  be  brought  into  it.  That  country  now 
ships  coal  to  many  parts  of  the  world  where  it  exists  in 
greater  quantity  than  in  the  comparatively  limited  measures 
of  the  British  Isles.  When  these  latter  have  been  exploited 
to  such  an  extent  that  they  can  no  longer  be  profitably 
worked  in  competition  with  those  of  countries  now  occupy- 
ing to  England  the  relation  of  importers  of  coal,  the  move- 
ment of  mineral  fuel  will  be  in  the  opposite  direction. 

When  we  consider  that  the  British  have  for  a  long  period 
been  shipping  coal  to  countries  which  have  extensive  coal 
measures  of  their  own,  and  that  the  quantity  exported  at 
present  nearly  reaches  fifty  million  tons  annually,  and  that 
that  rate  of  export  promises  to  increase  before  the  power 
of  capital  to  artifically  force  out  of  the  country  its  limited 
supplies  of  fuel  is  destroyed,  we  are  enabled  to  form  an 
impression,  but  a  very  inadequate  one,  of  the  extent  of  the 
waste  involved  in  living  up  to  the  Cobdenite  maxim  of 
buying  in  the  cheapest  market. 

If,  at  some  future  day,  an  economist  with  the  statistical 
bias  undertakes  to  show  the  wastefulness  of  the  system 
which  unduly  stimulated  external  trade  in  competing  prod- 
ucts he  will  have  no  difficulty  in  doing  so.  He  will  be  able 
to  cite  that  during  the  period  while  the.  people  of  Great 
Britain  were  exporting  coal  the  aggregate  of  their  ship- 
ments amounted  to  billions  of  tons,  and  that  when  their 
mines  were  practically  exhausted  they  were  compelled  to 
reverse  the  process  and  import  mineral  fuel.  The  figures 
thus  presented  will  interpret  themselves.  They  will  admit 
of  but  one  conclusion,  and  that  is  that  the  cheapness  result- 
ing from  the  system  of  unnecessary  transportation  was 
merely  fancied,  and  that  it  involved  irreparable  waste  and 
therefore  a  future  dearness  which  the  wit  of  man  cannot 
mitigate. 

Although  the  unnecessary  and  premature  consumption 
of  mineral  fuel  by  a  people  like  the  British,  caused  by  manu- 


INTRODUCTION  19 

facturing  articles  for  peoples  capable  of  producing  for  them- 
selves, affords  the  most  striking  illustration  of  the  fatuity 
of  the  free  trade  system,  it  will  not  weaken  the  argument 
directed  against  economic  waste  to  point  out  that  the  forced 
development  of  the  iron  and  steel  industry  of  Great  Britain 
has  brought  about  a  similar  result,  the  effects  of  which  are 
already  seen.  While  the  United  Kingdom  remained 
supreme  in  this  branch  of  manufacture  her  annual  shipments 
of  its  products  reached  millions  of  tons.  The  advantages 
of  superior  equipment  and  greater  capital  which  for  a  time 
enabled  British  manufacturers  to  export  to  countries  whose 
resources  in  the  shape  of  ores  and  fuel  were  immeasurably 
greater  are  rapidly  disappearing.  The  iron  and  steel  man- 
ufacturers of  England  are  becoming  more  and  more  depend- 
ent upon  the  foreigner  for  supplies  of  ores,  and  the  tide  of 
products  of  iron  and  steel  is  beginning  to  set  in  toward 
the  shores  of  Britain  rather  than  away  from  them. 

The  consequences  to  the  British,  as  a  people,  of  this 
reflex  action  is  fully  considered  in  its  appropriate  place. 
Here,  it  is  only  referred  to  in  order  to  impress  on  the 
economic  student  that  it  has  resulted  in  the  unnecessary 
dissipation  of  an  enormous  quantity  of  human  energy  and 
an  irreparable  waste  of  the  world's  stock  of  mineral  fuel. 
Viewed  in  its  broader  aspect,  trading  which  results  in  denud- 
ing a  country  of  its  supplies  of  fuel  and  raw  material  will 
always  be  regarded  as  improvident.  Its  outcome  must 
necessarily  be  disastrous. 

It  is  impossible  to  keep  the  lamp  burning  without  oil. 
The  history  of  industrialism  shows  that  in  the  countries 
which  cannot  produce  their  own  oil  the  flame  of  industry 
soon  dies  out.  Where  the  consumption  is  unavoidable  no 
blame  can  attach,  but  when  it  is  prompted  by  greed  for 
present  gain  it  may  be  set  down  as  a  crime  against  posterity. 
When  the  industrial  lamp  of  England  goes  out  and  the 
British  people  are  left  in  darkness  the  historian  will  arraign 


20  INTRODUCTION 

as  fools  "the  blind  leaders"  of  a  blind  people  who  deliber- 
ately shipped  to  lands  far  better  supplied  with  mineral  fuel 
and  iron  ores  than  were  those  of  the  exporters  billions  of 
tons  of  coal  and  hundreds  of  millions  of  tons  of  iron  and  the 
products  of  iron  and  steel. 

Philosophers  have  amused  themselves  constructing 
theories  to  explain  the  origin  of  the  family.  The  merely 
animal  instinct  of  self-defense  is  generally  conceded  by  them 
to  have  been  the  primary  cause  which  brought  about  an  or- 
ganization which  served  as  a  foundation  for  rearing  the 
structure  of  a  highly  complex  civilization.  When  primeval 
man,  impelled  by  instinct,  formed  the  family  group  he  could 
not  have  divined  its  far-reaching  influence.  It  seems  that 
modern  protectionists,  driven  by  the  instinct  of  self-defense 
into  formulating  a  system  that  permits  them  to  maintain 
themselves  in  the  struggle  for  existence  which  modern  com- 
petition has  engendered,  are  equally  blind  to  the  far-reaching 
consequences  to  mankind  of  their  action.  They  do  not  see 
— at  least  many  do  not — that  the  instinct  of  banding  against 
aggression  has  called  into  existence  economic  methods  which 
tend  to  promote  universal  progress. 

Had  not  this  instinct  been  planted  in  the  human  breast 
the  process  of  evolution  would  be  infinitely  slower  than 
it  is.  Had  Great  Britain,  to  confine  our  observations  to 
comparatively  recent  times,  accepted  the  theory  which  the 
Dutch  might  have  advanced  when  England  was  little  better 
than  a  pastoral  country,  that  the  true  interests  of  Englishmen 
would  be  promoted  by  confining  themselves  to  the  produc- 
tion of  raw  wool  and  exchanging  it  for  the  cheaply  made 
cloths  of  the  Flemings,  the  weaver  might  still  be  plodding 
at  his  hand  loom  and  the  names  of  Watt,  Hargreaves  and 
Arkwright  might  have  been  unknown  to  the  world.  Had 
Americans  accepte'd  the  dictum  of  the  Cobdenites,  that  it 
is  wisdom  to  buy  in  the  cheapest  market,  no  McCormick  or 
Edison  would  have  been  heard  of  in  the  United  States. 


INTRODUCTION  21 

It  has  been  the  aim  of  the  writer  to  develop  the  idea 
that  the  desire  for  industrial  independence  which  has  called 
into  operation  the  system  of  protection  is  almost  wholly 
responsible  for  the  marvelous  strides  toward  universal  in- 
tegration which  have  been  witnessed  in  modern  times,  and 
to  show  that  the  acceptance  of  the  theory  of  buying  in  the 
cheapest  market  would  have  resulted  in  paralyzing  endeavor 
throughout  the  greater  part  of  the  habitable  world.  To 
accomplish  this  purpose  it  has  been  necessary  to  briefly 
sketch  the  industrial  history  of  England  and  show  that  the 
progress  of  that  country  and  the  commercial  supremacy 
attained  by  it  were  wholly  due  to  a  well  conceived  and 
strictly  maintained  policy  of  protection,  and  that  the  con- 
cept of  buying  in  the  cheapest  market  never  received  its 
modern  interpretation  until  Englishmen  felt  confident  that 
they  would  be  able  to  prevent  rivals  manufacturing  for 
themselves. 

The  fact  is  also  brought  forward  with  as  much  force  as 
the  writer  can  command  that  the  school  of  economists  who 
have  given  form  to  the  so-called  free  trade  system  were 
misled  regarding  the  causes  of  the  industrial  supremacy 
which  the  British  enjoyed  for  a  considerable  period.  The 
blunders  and  inconsistencies  of  the  advocates  of  the  idea 
that  some  time  about  the  middle  of  the  nineteenth  century 
the  world  had  assumed  fixed  conditions  which  made  it  pos- 
sible to  assert  that  the  people  of  one  country  were  best  fitted 
by  nature  to  produce  rude  products,  while  other  peoples 
were  providentially  endowed  with  the  gift  to  fashion  them 
into  finished  articles,  have  been  exposed ;  and  the  logic  of 
experience  has  been  set  against  conclusions  reached  by  a 
priori  methods  and  the  latter  have  invariably  been  proved 
unsound. 

The  parallel  attempt  to  sketch  the  advances  toward  in- 
tegration under  protection  and  to  point  out  and  analyze 
the  errors  of  writers  who  have  been  unable  to  see  that  the 


22  INTRODUCTION 

system  of  present  cheapness  advocated  by  them  must  ulti- 
mately lead  to  dearness  has  prevented  that  orderly  marshal- 
ing of  facts  and  arguments  which  is  always  desirable.  But 
while  the  narrative  may  occasionally  lack  continuity,  it  is 
hoped  that  the  digressions  are  not  serious  enough  to  divert 
attention  from  the  main  purpose  of  establishing  the  fact 
that  protection  has  an  economic  basis,  and  that  it  is  unques- 
tionably broadening  the  field  of  industrial  development  and 
concurrently  bringing  into  the  pale  of  heterogenity  nations 
which,  had  the  free  trade  idea  prevailed,  must  always  have 
remained  in  that  homogenous  state  which  the  historian  and 
philosopher  have  alike  agreed  to  think  and  speak  of  as  a 
condition  resembling  barbarism. 

If  the  demonstration  that  protection  by  encouraging  the 
spirit  of  self  dependence  is  turning  the  whole  world  into  a 
workshop,  thus  eliminating  the  factor  of  unnecessary  waste 
of  human  energy  and  fuel,  is  not  complete,  the  purpose  of 
writing  the  following  chapters  has  not  been  accomplished. 
If  the  writer  has  not  been  able  to  show  conclusively  that 
the  adoption  of  Cobdenism  must  have  resulted  in  ultimate 
dearness  he  has  missed  his  aim.  But  nevertheless,  as  the 
years  march  on,  it  will  be  seen  that  a  system  which  elevated 
the  consumer  to  the  first  place  and  which  has  made  the  mid- 
dleman of  more  consequence  than  the  producer  has  vital 
defects.  Unless  it  can  be  shown  that  the  value  of  com- 
modities is  enhanced  by  unnecessarily  transporting  them 
to  and  fro  the  Cobdenite  policy  of  moving  raw  materials  to 
one  country  to  be  manufactured,  and  thence  distributing 
them  over  the  world,  can  never  be  justified. 

The  porter  fills  a  useful  function,  but  no  one  will  say  that 
he  makes  the  article  he  carries  more  valuable.  The  dis- 
honest hackman  who  drives  an  ignorant  passenger  two  or 
three  miles  out  of  his  way  to  increase  his  fare  may  profit 
by  the  transaction,  but  the  object  of  the  extortion  is  not  a 
gainer.     The   swelling  army  of  middlemen  composed   of 


INTRODUCTION  23 

transporters,  factors,  jobbers,  etc.,  who  are  engaged  in  the 
unnecessary  handHng  and  hauHng  of  products,  perform  no 
greater  service  to  society  than  the  "cabby"  who  charges  his 
fare  an  extra  rate  for  consuming  his  time  in  a  purposely 
roundabout  journey. 

The  promotion  of  free  trade  must  inevitably  result  in 
wastefulness,  because  in  the  main  its  workings  are  anal- 
ogous to  the  tricky  operation  of  the  cabman.  It  makes  the 
consumer  pay  for  unnecessary  expenditures  of  energy. 
Whatever  its  professed  purpose  may  be,  Cobdenism's  real 
object  is  to  increase  the  wealth  of  the  nation  practicing  it 
at  the  expense  of  society  generally,  and  to  further  that  aim 
methods  have  been  advocated  by  professional  economists 
that  are  no  more  defensible  than  the  trick  of  the  hackman. 
The  extolled  roundabout  foreign  trades  and  the  lauded  bene- 
fits of  international  exchanges  have  obscured  the  fact  that 
true  economy  demands  that  producer  .and  consumer  be 
brought  as  close  together  as  possible. 

This  is  the  purpose  of  protection,  and  the  swelling  figures 
of  production,  and  its  lessening  of  prices,  show  that  it  is 
being  achieved.  The  great  factor  in  the  marvelous  expan- 
sion of  modern  industry  is  national  self  dependence  and  its 
resultant  economies.  It  is  inconceivable  that  the  world 
would  be  able  to  consume  the  tremendous  quantity  of  prod- 
ucts of  iron  and  steel  it  does  at  present  if  it  were  dependent 
upon  one  or  two  nations  for  its  supplies.  It  is  by  bringing 
the  rolling  mill  close  to  the  doors  of  the  farmers  of  this  and 
other  countries  and  eliminating  the  waste  of  unnecessary 
transportation  that  they  are  enabled  to  use  those  articles 
freely.  Had  England  remained  the  chief  producer  the 
British  would  have  grown  more  wealthy,  but  American 
farmers  and  those  of  other  countries  would  have  used  less 
iron  and  steel. 

The  conditions  which  have  admittedly  been  brought 
about  by  protective  tariffs  can  only  be  maintained  by  retain- 


24  INTRODUCTION 

ing  them.  Nothing  will  have  been  gained  by  a  nation  if 
after  laboriously  building  up  a  great  industry  it  deliberately 
sacrifices  it  by  entering  upon  a  competition  the  terms  of 
which  can  never  be  fairly  adjusted.  There  can  be  no  real 
economy  in  a  country  such  as  the  United  States,  with  its 
overwhelming  superiority  of  resources  of  raw  materials  and 
its  skillful  artisans,  importing  iron  products  or  textile 
fabrics.  If  any  nation  produces  them  more  cheaply  it  is 
because  its  workingmen  are  willing  to  adopt  a  lower  standard 
of  living  than  Americans.  That  the  desperate  straits  in 
which  the  peoples  of  some  overcrowded  countries  find  them- 
selves will  induce  them  to  lower  their  standard  of  living 
and  thus  make  future  reductions  in  labor  cost  is  more  than 
probable.  The  chief  function  of  a  protective  tariff  is  to 
guard  against  such  a  result  and  preserve  the  standard  of 
living  attained  by  workers  within  the  boundaries  of  a 
nation,  thus  preventing  them  being  reduced  to  a  common 
level  of  degradation.  The  result,  no  matter  how  nominal 
prices  may  be  affected,  must  be  real  cheapness,  that  cheap- 
ness which  manifests  itself  in  increased  consumption  and 
the  enlarged  enjoyment  of  the  conveniences  of  an  advanced 
civilization. 

That  protection  is  conducive  to  this  end  the  writer  hopes 
to  prove  in  the  following  pages,  which  have  been  written  to 
show  that  the  system  has  not  fulfilled  its  mission  by  merely 
calling  manufacturing  industries  into  existence,  but  that 
it  must  be  maintained  to  guard  against  the  destructive 
eflfects  of  the  growing  tendency  of  nations  producing  in 
excess  of  their  needs  to  dump  their  surpluses  upon  foreign- 
ers. Justice  to  the  producing  population  requires  the  inter- 
vention of  an  equalizing  tarifif,  and  in  according  this  justice 
the  prime  object  of  a  true  economic  policy  will  be  subserved, 
namely,  the  elimination  of  wastefulness.  That  is  the  eco- 
nomic basis  of  protection,  and  it  accounts  for  the  virility  of 
the  system  now  generally  adopted  by  the  civiHzed  world. 
San  Francisco,  January  5,  1899. 


CHAPTER  1. 
GROWTH  OF  English'  industry. 

SKETCH   OF  THE   EARLY   INDUSTRIAL   ATTEMPTS  OF  THE 
BRITISH  PEOPLE. 

Simon  de  Montfort's  essay  at  protection  in  1264 — Aspirations  for  in- 
dustrial independence  and  liberty  go  together — Edward  III  and 
his  protective  efforts — Immigration  of  skilled  Flemings  into 
the  realm  during  his  reign — The  rise  of  the  English  cloth 
trade  causes  the  industrial  prostration  of  Flanders — British 
agriculture  did  not  prosper  until  manufactures  were  introduced 
in  the  islands — An  agricultural  country  will  remain  perma- 
nently destitute  of  manufactures  unless  it  resorts  to  artificial 
methods  to  stimulate  them — Slow  growth  of  English  manu- 
factures— The  commercial  element  in  the  Puritan  character — 
Effects  of  the  Navigation  Act — Control  of  the  trade  of  the 
colonies  through  its  adoption — Use  of  coal  in  smelting  iron  a 
great  stimulus  to  industry — Growth  of  English  industry  more 
rapid  before  than  after  the  repeal  of  the  corn  laws — Great 
Britain's  industrial  primacy  during  the  Napoleonic  wars — 
Free  trade  fallacy  exposed  by  comparison  of  England's  position 
before  and  after  1846 — The  prostration  of  British  industries  in 
the  '40s  due  to  overproduction — Origin  of  the  theory  of 
the  cheap  loaf  and  the  world's  workshop. 

In  the  second  volume  of  Nicholson's  "Principles  of 
Political  Economy,"  which  may  be  said  to  present  the 
revised  opinion  of  the  professional  economists  of  England 
on  the  subject  of  free  trade,  we  find  the  admission  that  the 
adoption  of  the  system  by  the  United  Kingdom  "in  the  sense 
of  extreme  laissea  faire  was  dtie  to  the  force  of  events  rather 
than  to  the  force  of  reasoning."*  The  author  also  tells  us 
that  "free  trade  finds  its  strongest  support  in  the  direct 

^Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  249. 


26  PROTECTION  AND  PROGRESS 

appeal  to  complex  experience  rather  than  in  the  statements 
of  first  principles."* 

Those  familiar  with  the  literature  of  the  subject  will 
recognize  that  this  attitude  of  the  Edinburgh  professor 
differs  str-kingly  from,  fhitt  oi  the  teachers  of  the  Manchester 
school^  Avho  have  formulated  theories  which  have  for  a 
long.tinie  fcet^n  accepted  by  millions  of  people  in  and  out 
of  England  as  perfectly  sound,  despite  the  fact  that  most  of 
them  have  refused  to  work  well  in  practice. 

In  this  and  the  succeeding  chapters  an  effort  will  be 
made  to  trace  the  growth  of  these  theories  and  to  examine 
the  causes  which  led  to  their  acceptance.  To  do  this  it  will 
be  necessary  to  briefly  outline  the  economic  history  of  Eng- 
land during  preceding  centuries  in  order  to  show  the  in- 
dustrial status  of  that  country  at  the  time  of  the  abrogation 
of  the  corn  laws  and  to  determine  what  causes  contributed  to 
make  the  people  of  an  island,  not  over-endowed  with  natural 
resources,  the  wealthiest  on  the  globe. 

The  material  for  such  an  investigation  as  that  proposed 
exists  in  overwhelming  abundance,  and  much  of  it  is  of  such 
a  character  that  when  presented  it  will  be  accepted  without 
challenge,  consisting,  as  it  does,  almost  wholly  of  state- 
ments and  admissions  made  by  English  historians  and  those 
of  economic  writers  who  have  advocated  "Cobdenism,"  a 
term  which  will  frequently  be  employed  alternatively  with 
that  of  free  trade  in  the  following  discussion. 

The  first  attempt  at  protection  in  England  was  made  as 
early  as  1264  by  Simon  de  Montfort  during  the  Barons' 
war.  He  forbade  any  cloth  to  be  worn  that  was  not  of 
English  make.  It  is  significant  that  this  statesman  was 
regarded  by  the  people  of  his  time  as  the  champion  of 
liberty,  and  historians  are  agreed  that  he  brought  about 
"a  constitutional  change  of  mighty  issue"  in  English  history. 
It  was  through  his  instrumentality  that  the  merchant  and 

♦Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  270. 


ENGLISH  INDUSTRY  27 

the  trader  were  first  summoned  to  sit  beside  the  knight  of 
the  shire,  the  Baron  and  the  Bishop  in  the  Parhament  of  the 
realm  of  England.* 

It  is  not  surprising  that  this  English  patriot,  who  so 
greatly  enlarged  the  bounds  of  liberty,  should  have  advocated 
protection,  and  on  the  distinct  ground  that  the  British  peo- 
ple should  develop  their  own  resources,  and  so  far  as  possible 
render  themselves  independent  of  foreigners.  The  troubled 
conditions  of  the  times  may  have  helped  impel  his  mind  to 
such  a  policy,  but  it  is  more  than  probable  that  it  was  obser- 
vation of  the  fact  that  the  foreigner  was  powerful  because 
he  utilized  his  resources  which  prompted  Sir  Simon  to  the 
course  he  pursued. 

The  times  following  the  death  of  Simon  de  Montfort 
and  the  accession  of  Edward  III  were  troublous,  but  much 
was  accomplished  for  freedom.  "Under  the  first  Edward 
the  Parliament  had  vindicated  its  right  to  the  control  of 
taxation ;  under  the  second  it  had  advanced  from  the  removal 
of  Ministers  to  the  deposition  of  a  King;  under  the  third 
it  gave  its  voice  on  questions  of  peace  and  war,  controlled 
expenditure  and  regulated  the  course  of  civil  administra- 
tion."! Concurrently  with  the  growth  of  these  civil  and 
political  rights  the  idea  began  to  prevail  that  it  was  a  sense- 
less proceeding  for  Englishmen  to  grow  wool,  ship  it  to  other 
countries  and  have  it  returned  to  them  in  the  shape  of  manu- 
factured cloth.  The  seed  sown  by  Simon  de  Montfort  was 
beginning  to  bear  fruit.  The  national  feeling  was  growing 
stronger  and  stronger  and  many  efforts  were  made  to 
promote  the  development  of  the  resources  of  England.  The 
exportation  of  sheep  was  forbidden  and  Englishmen  were 
not  permitted  to  wear  foreign  cloth  without  special  license 
from  the  King.  This  was  in  1338,  under  Edward  III. 
About  this  time  that  monarch  invited  a  number  of  Flemings 


*Green,  History  of  the  English  People,  Vol.  I,  p.  301. 
flbid,  Vol.  I,  p.  416. 


28  PROTECTION  AND  PROGRESS 

skilled  in  the  art  of  making  cloth  to  make  their  homes  In 
England,  and  to  encourage  the  industry  which  he  sought  to 
establish  heavy  export  duties  were  imposed  on  wool,  the 
object  being  to  make  it  cheaper  at  home  and  dearer  abroad. 

This  method  of  bringing  about  the  desired  result  does 
not  commend  itself  to  modern  protectionists,  but  it  must  be 
recalled  that  at  this  time  England  was  one  of  the  chief 
sources  of  the  raw  material  required  by  the  manufacturers 
of  Flanders  and  that  the  idea  was  prevalent  in  that  country 
and  in  England  that  English-grown  wool  was  incomparably 
superior  to  any  other.  Time  has  shown  that  the  assumption 
was  fallacious,  but  the  evidence  is  incontestable  that  the 
purpose  of  Edward  was  achieved. 

A  carefully  prepared  sketch  of  the  early  history  of  the 
English  woolen  industry,  by  W.  J.  Ashley,  a  fellow  of 
Lincoln  College,  opens  with  the  statement  that  "the  history 
of  English  wool  and  cloth  explains  the  origin  of  the  wealth 
of  England  and  illustrates  with  peculiar  clearness  the  devel- 
opment of  industry,"*  an  assertion  which  he  follows  with 
conclusive  proof  that  the  policy  inaugurated  by  Edward  III 
was  one  of  the  chief  causes  "of  the  destruction  of  the 
Flemish  industry  and  the  rise  of  the  English  cloth  trade  in 
the  sixteenth  and  seventeenth  centuries." 

It  would  be  impossible  to  even  glance  at  all  the  results 
which  followed  the  conscious  efforts  of  English  statesmen 
to  diversify  the  industries  of  the  realm.  To  do  so  would 
involve  rewriting  the  history  of  England  for  the  past  five 
centuries ;  but  in  order  to  make  it  clear  that  the  present 
wealth  of  Great  Britain  is  unquestionably  due  to  the  policy 
of  protection  it  will  be  well  to  point  out  that  prior  to  the 
introduction  of  the  Flemish  weavers  by  Edward  there  was 
absolutely  no  progress  and  that  the  condition  of  the  British 
people  was  in  many  respects  deplorable.  Although  the  pop- 
ulation of  the  island  at  the  time  of  Edward's  accession  was 

♦American   Economic  Association   Publication. 


ENGLISH  INDUSTRY  29 

not  less  than  two  and  a  quarter  millions*  the  inhabitants 
were  steeped  in  poverty. 

A  distinguished  English  writer,  the  gifts  of  whose  intel- 
lect were  devoted  to  the  discovery  of  theories  to  support  the 
contention  that  the  prosperity  which  followed  the  abroga- 
tion of  the  corn  laws  was  due  to  this  change  in  the  incidence 
of  British  taxation,  has  made  an  exhaustive  study  of  the 
stationary  condition  of  the  English  people  during  the  middle 
ages  and  has  furnished  much  evidence  to  support  his  opinion 
that  it  was  due  to  failure  to  improve  the  arts  of  agriculture. 
It  is  not  difficult,  however,  to  detect  that  this  failure  was  a 
secondary  cause  and  that  the  primary  one  was  the  neglect 
of  other  and  more  important  resources  of  the  island.  Had 
the  English,  between  1377  and  the  close  of  the  sixteenth 
century,  been  energetic  in  all  fields  of  industry  the  writer 
we  quote  would  not  have  been  called  upon  to  record  "that 
for  upward  of  two  centuries,  just  as  there  had  been  no 
improvement  in  the  art  of  agriculture,  so  there  was  no 
increase  in  population. "f 

The  same  writer  and  other  English  economists  have 
made  it  tolerably  clear  that  the  improvement  of  agriculture 
is  in  a  large  degree  dependent  upon  the  growth  of  manu- 
factures and  that  it  is  always  in  a  more  forward  state  in 
those  countries  in  which  the  mechanic  arts  flourish.  Arthur 
Hassall,  writing  of  the  beginning  of  the  eighteenth  century, 
tells  us  that  "wherever  trade  developed  in  Europe  the  con- 
dition of  the  agricultural  classes  improved  and  an  independ- 
ent, wealthy  and  intelligent  middle  class  grew  up  which 
supplied  to  the  various  countries  many  admirable  financiers, 
administrators  and  soldiers. "|  Adam  Smith,  whose  views 
regarding  the  state  of  agriculture  in  England  differ  from 
those  expressed  by  Rogers,  asserted  that  the  cultivation  of 
the  land  in  England  in  his  time  was  in  a  more  forward  state 

*Rogers,  Economic  Interpretation  of  History,  p.  48. 

flbid,  p.  49. 

JHassall,  European  History  17 15- 1789,  p.  5. 


30  PROTECTION  AND  PROGRESS 

than  that  of  France,*  and  he  pointed  out  that  it  was  im- 
portant that  the  capital  of  manufacture  should  reside  within 
a  country,  because  "it  necessarily  puts  in  motion  a  greater 
quantity  of  productive  labor  and  adds  a  greater  value  to  the 
produce  of  the  land  and  labor  of  society. "f  Mill  lays  it  down 
as  a  general  proposition  that  "a  country  will  seldom  have 
a  productive  agriculture  unless  it  has  a  large  town  popula- 
tion,"J  and  he  attributes  the  relatively  inferior  agricultural 
productiveness  of  India  to  its  comparative  lack  of  large 
towns  and  cities." § 

On  the  whole,  therefore,  we  must  conclude  that  while  the 
later  improvement  of  agriculture  in  England,  which  Pro- 
fessor Rogers  notes,  undoubtedly  permitted  the  expansion  of 
population,  that  improvement  was  due  chiefly  if  not  wholly 
to  the  extension  of  manufactures,  which,  in  turn,  called  into 
existence  a  growing  commercial  class.  As  commerce  and 
manufactures  expanded  the  condition  of  the  agricultural 
classes  improved,  and  it  continued  to  do  so  until  the  British 
adopted  the  policy  of  stimulating  manufacturing  at  the  ex- 
pense of  the  tiller  of  the  soil. 

The  slow  growth  of  manufactures  and  trade  in  England 
after  the  policy  of  protection  had  been  resolved  upon  exhibits 
the  great  difficulty  experienced  by  a  people  in  changing  the 
course  of  industry  and  disputes  the  assumption  that  a  popula- 
tion wholly  devoted  to  agriculture  will,  in  the  face  of  an 
active  competition  and  without  artificial  aid,  ultimately 
develop  a  system  of  manufactures  for  itself.  As  already 
noted,  the  practical  beginning  of  manufacturing  in  Eng- 
land may  be  dated  from  the  beginning  of  the  fourteenth 
century.  One  hundred  and  fifty  years  later,  or  about  the  time 
of  the  discovery  of  America,  the  product  of  British 
manufactures  was  only  valued  at  ii,ooo,ooo,  or  a  trifle  over 


♦Smith,  Wealth  of  Nations,  Book  III,  Chap.  IV. 
flbid,  Book  II,  Chap.  V. 

JMill,  Principles  of  Political  Economy,  Vol.  I,  p.  162. 
§Ibid,  p.  163. 


ENGLISH  INDUSTRY  3I; 

5  shillings  per  capita.  But  great  oaks  grow  from  small  acorns, 
and  while  that  planted  by  Simon  de  Montfort  and  watered 
by  Edward  III  and  other  sagacious  sovereigns,  who,  like 
Elizabeth,  were  guided  by  the  advice  of  shrewd  statesmen, 
increased  in  girth  and  height,  but  slowly  it  eventually  be- 
came a  mighty  monarch  in  the  forest  of  industry  and  for  a 
long  time  threatened  to  overshadow  and  exterminate,  root 
and  branch,  the  trade  trees  planted  by  rival  nations. 

That  the  growth  of  English  trade  and  manufactures  was 
in  no  sense  a  natural  one  every  reader  of  history  must  be 
aware.  Few  writers  make  the  fact  perfectly  clear,  but  those 
who  care  to  read  between  the  lines  can  see  that  the  animating 
spring  of  all  British  political  movement  after  the  fifteenth 
century  was  trade.  The  Reformation  was  in  a  certain  sense 
as  much  a  struggle  for  commercial  supremacy  as  for  religious 
freedom.  One  cannot  help  noting  the  admixture  of  political 
economy  and  religion  in  such  writings  as  the  "Constitutional 
Documents  of  the  Puritan  Revolution"  and  Fuller's  "Church 
History,"  and  he  who  only  sees  the  sentimental  side  of 
Oliver  Cromwell's  character  fails  to  recognize  the  qualities 
that  entitled  him  to  a  niche  in  the  temple  of  fame  as  a  great 
statesman ;  one  who  was  considerately  desirous  of  advancing 
the  material  interests  of  the  people  whose  destinies  he  con- 
trolled. 

A  letter  written  in  1659  by  Samuel  Lamb,  a  prominent 
London  merchant,  to  Cromwell,  and  afterward  published 
as  a  pamphlet,  shows  the  trend  of  Puritan  thought  in  Eng- 
land at  this  time,  and  how  largely  it  was  filled  with  the  idea 
that  in  order  for  a  people  to  truly  appreciate  the  beauties  of 
religious  freedom  they  must  be  afiforded  the  opportunity  to 
increase  their  stores  of  wealth.*  Sir  Joshua  Child,  in  a 
treatise  published  in  1690,  found  as  much  to  admire  in  the 
mercantile  system  of  the  Netherlands  as  he  did  in  the 
religious   teachings  of  the   Dutch   scholars.     His  book   is 

♦Lord  Somer's  Tracts,  Ed.  by  Sir  W.  Scott,  Vol.  VI,  p.  446,  etc. 


32         PROTECTION  AND  PROGRESS 

filled  with  advice  to  his  countrymen,  upon  whom  he  urges 
the  necessity  of  imitating  the  Holland  virtue  of  honesty 
in  commercial  dealings  as  well  as  their  theology  if  they  desire 
to  become  great.* 

The  policy  of  stimulating  shipping,  so  highly  extolled  by 
Smith,  who  says :  "As  defense  is  of  much  more  importance 
than  opulence,  the  act  of  navigation  is  perhaps  the  wisest 
of  all  the  commercial  regulations  of  England,"!  was  bor- 
rowed from  the  Dutch  during  the  sitting  of  the  Long 
Parliament,  but  it  is  doubtful  whether  there  is  any  ground 
for  the  assumption  that  its  adoption  was  inspired  by  the 
animosity  existing  between  the  Hollanders  and  English. 
There  is  too  much  evidence  of  the  kind  referred  to  above 
to  forbid  any  other  explanation  of  the  English  resort  to  the 
system  than  a  desire  to  secure  for  England  the  commercial 
advantages  which  the  Dutch  had  derived  from  a  similar  law 
and  which  Englishmen  were  observing  with  growing 
jealousy. 

But  the  motive  need  not  be  inquired  into  so  narrowly, 
as  we  are  merely  concerned  with  the  results.  That  they  were 
excellent  Smith  testifies,  for  he  says  "the  regulations  of  this 
famous  act  are  as  wise  as  if  they  had  been  dictated  by  the 
most  deliberate  wisdom.  National  animosity  at  that  partic- 
ular time  aimed  at  the  very  same  object  which  the  most 
deliberate  wisdom  would  have  recommended,  the  diminution 
of  the  naval  power  of  Holland,  the  only  naval  power  which 
could  endanger  the  security  of  England. "| 

The  EngHsh  economist  assumes  that  the  chief  part  played 
by  the  navigation  act  was  to  promote  the  national  defense, 
but  those  familiar  with  the  history  of  the  British  trade  with 
the  American  colonies  assert  with  positiveness  that  such  a 
measure  was  essential  to  its  preservation.  "Throughout 
the  greater  part  of  the  seventeenth  century  the  people  of 
Holland  were  larger  producers  of  certain  kinds  of  manufac- 

♦Child,  A  New  Discourse  on  Trade. 

fSmith,  Wealth  of  Nations,  Book  IV,  Chap.  II. 

Jlbid. 


ENGLISH  INDUSTRY  33 

tured  articles  than  the  people  of  England  and  were  in  a 
position  to  sell  at  lower  figures.  As  long  as  the  English  and 
Dutch  merchants  stood  upon  equal  footing  in  the  colony 
(the  writer  quoted  from  is  here  speaking  particularly  of 
Virginia)  the  English  had  to  conform  to  the  prices  of  the 
Dutch  in  disposing  of  their  cargoes  in  Virginia,  and  from  this 
fact  the  population  reaped  a  decided  advantage  in  their  sup- 
plies. The  exclusion  of  the  Dutch  (by  the  act  of  navigation) 
signified  that  thereafter  the  English  trader  was  restricted  by 
competition  only  with  men  of  his  own  nationality  in  fixing 
prices."* 

That  the  navigation  act  proved  an  important  aid  to  the 
extension  of  English  commerce  we  learn  from  other  sources. 
Rogers  tells  us  that  "the  beginning  of  the  trade  in  English 
manufactures  is  to  be  found  in  the  trade  relations  between 
this  country  (England)  and  the  American  Plantations  *  *  * 
and  that  the  most  important  factors  in  that  trade  were 
tobacco  and  rice."t  Up  to  the  time  of  the  passage  of  the  act 
the  Dutch  were  successfully  dealing  with  the  colonists,  and, 
by  offering  manufactured  wares  more  cheaply  than  the 
English,  were  threatening  the  trade  of  the  latter.  The  ex- 
clusion of  the  Dutch  gave  the  British  a  complete  monopoly 
of  the  sale  of  manufactured  goods  in  the  plantations,  and 
eventually  choked  off  the  disposition  which  had  once  mani- 
fested itself  among  the  colonists  to  pursue  a  course  of  self- 
helpfulness. 

How  completely  the  business  of  supplying  the  early 
Virginians  was  engrossed  by  British  traders  after  the  naviga- 
tion act  gave  them  absolute  control  may  be  inferred  from 
the  statement  that  the  hides  of  animals  killed  in  the  planta- 
tions were  shipped  to  England,  while  shoes  were  imported 
from  that  country,  and  that  in  spite  of  the  fact  that  the  forests 
of  the  colony  abounded  in  an  infinite  variety  of  woods  the 

♦Bruce,  Economic  History  of  Virginia,  Vol.  II,  p.  376. 

fRogers,  Industrial  and  Commercial  History  of  England,  p.  397, 
8 


34  PROTECTION  AND  PROGRESS 

colonists  were  in  the  habit  of  obtaining  from  England  their 
chairs,  tables,  stools,  chests,  boxes,  cart  wheels  and  even 
their  wooden  bowls  and  birchen  brooms.* 

The  reference  to  the  colonizing  of  Virginia  reminds  us 
that  it  was  prompted  by  the  expectation  that  the  new  planta- 
tions would  furnish  the  mother  country  with  a  vast  supply 
of  raw  iron.  The  demand  for  ma  mfactured  iron  was 
rapidly  increasing  in  England  at  the  time  the  plantations 
were  established,  but  the  ability  of  English  furnaces  to 
meet  it  was  declining  on  account  of  the  diminishing  quantity 
of  fuel  provided  by  the  English  forests.  The  existence  of 
large  bodies  of  coal  in  England  was  already  known,  but  it 
was  not  until-  the  middle  of  the  eighteenth  century  that  a 
process  of  smelting  iron  with  this  species  of  fuel  was  devised 
which  proved  effective.! 

Up  to  this  latter  time  the  English  manufacturer  depended 
almost  exclusively  for  his  supplies  of  raw  iron  on  the  Bis- 
cayan  and  Swedish  forges,  the  efforts  to  open  mines  in 
Virginia  having  failed.  It  is  doubtful  whether  a  ton  of  iron 
of  English  or  Scotch  manufacture  was  exported  until  after 
the  first  half  of  the  eighteenth  century.  But  about  this 
time  the  discovery  that  coal  would  serve  as  a  smelting  fuel 
revolutionized  the  aspect  of  the  iron  trade,  and  it  was  the 
free  utilization  of  the  discovery  in  conjunction  with  the 
artificial  efforts  to  stimulate  external  and  preserve  the  home 
trade  that  soon  placed  England  at  the  head  of.  industrial 
Europe. 

That  the  English  under  certain  circumstances  might 
have  continued  dependent  for  a  long  time  upon  the  Biscayan 
or  Swedish  forges  for  the  limited  supplies  of  iron  required 
by  them  is  quite  certain.  Had  they  permitted  their  country 
to  remain  in  a  state  little  better  than  pastoral,  with  no  other 
ambition  than  to  provide  wool  for  the  Dutch  to  fashion  into 

♦Bruce,  Economic  History  of  Virginia,  Vol.  II,  p.  398. 

f Green,  History  of  English  People,  Vol.  IV,  p.  1732. 

J  Rogers,  Industrial  and  Commercial  History  of  England,  p.  397. 


ENGLISH  INDUSTRY  35 

fabrics,  it  is  very  probable  they  would  never  have  made 
the  experiments  which  resulted  in  the  utilization  of  their  coal 
measures.  The  lethargic  condition  into  which  all  purely  agri- 
cultural and  pastoral  peoples  fall  would  have  made  inno- 
vation impossible. 

The  discovery  of  the  availability  of  coal  as  a  smelting 
fuel  was  due  to  the  trading  instinct  which  was  aroused  by 
the  encouragement  of  manufactures,  and  in  its  train  followed 
an  invention  of  equal,  perhaps  of  greater,  importance.  It 
was  the  revelation  of  the  value  of  coal  as  a  means  of  pro- 
viding mechanical  energy  which  enabled  Watt  in  1765  to 
transform  the  steam  engine  into  the  most  wonderful  instru- 
ment which  industry  has  ever  had  at  its  command.  Green 
says  "the  innovation  came  at  a  moment  when  the  existing 
supply  of  manual  labor  could  no  longer  cope  with  the 
demands  of  the  manufacturers,"  and  he  rightly  holds  that 
the  three  inventions  within  the  space  of  twelve  years — that 
of  the  spinning  jenny  in  1764  by  the  weaver  Hargreaves, 
the  spinning  machine  in  1768  by  the  barber  Arkwright,  and 
of  the  mule  by  the  weaver  Crompton,  and  the  loom  which 
followed  not  long  after — were  the  natural  results  of  the 
discovery  of  the  valuable  heat-giving  property  of  coal.* 

The  tremendous  industrial  strides  made  by  the  English 
after  the  introduction  of  these  remarkable  aids  to  industry 
is  testified  to  by  all  historians,  no  less  emphatically  by  those 
who  are  affected  by  the  free  trade  bias  than  by  protectionists, 
but  it  has  been  the  custom  during  recent  years  for  English 
writers  to  give  undue  prominence  to  the  expansion  of  trade 
and  manufactures  since  the  repeal  of  the  corn  laws.  Truth, 
however,  demands  that  they  should  occasionally  bring  into 
relief  the  conditions  which  existed  prior  to  1846.  Whenever 
this  is  done  it  will  be  seen  that  England  occupied  a  more 
dominating  commercial  position  before  than  since  that  date. 

The  historian  Green  is  authority  for  the  assertion  that  at 

*Green,  History  of  English  People,  Vol.  IV,  p.  1732. 


36  PROTECTION  AND  PROGRESS 

the  time  of  the  great  Napoleonic  wars  the  pervasiveness  of 
English  manufactures  was  such  as  to  virtually  nullify  the 
political  movements  of  enemies.  Speaking  of  the  paper 
blockade,  he  says :  "It  was  impossible  even  for  Napoleon  to 
do  without  the  goods  he  pretended  to  exclude ;  an  immense 
system  of  licenses  soon  neutralized  the  decree;  and  the 
French  army  which  marched  to  Eylau  was  clad  in  greatcoats 
made  at  Leeds  and  shod  with  shoes  made  at  Northampton."* 
Properly  interpreted,  this  means  that  during  the  early  part 
of  the  present  century  the  rest  of  the  civilized  world  was 
largely  dependent  on  England  for  its  supplies  of  manufac- 
tured articles. 

By  artificially  stimulating  her  various  industries  Great 
Britain  had  early  attained  a  commanding  position.  Her 
protective  tariffs  had  multiplied  factories  throughout  the 
islands  and  her  navigation  act  had  covered  the  sea  with  her 
fleets.  The  coffers  of  her  merchants  were  filled  to  over- 
flowing, their  prosperity  being  directly  due  to  the  system 
which  had  been  consistently  followed  for  five  centuries. 
But  superficial  free  trade  writers,  disregarding  the  evidence 
that  it  was  protection  which  made  the  subsequent  career  of 
England  possible,  have  assumed  that  it  was  the  repeal  of 
the  corn  laws  and  others  changes  in  the  incidence  of  taxation 
which  made  her  the  wealthiest  nation  in  the  world. 

The  assumption  that  the  commanding  position  achieved 
by  Great  Britain  is  due  to  free  trade  cannot  be  successfully 
than  it  is  today.  If  the  circumstances  are  properly  con- 
sidered it  will  be  seen  that  the  Cobdenites  are  no  more  en- 
titled to  claim  that  their  policy  brought  about  the  industrial 
conditions  existing  in  England  than  the  inheritor  of  a  great 
estate  would  be  privileged  to  assert  that  he  is  the  architect  of 
his  own  fortunes. 

In  1830  the  population  of  England  had  already  reached 
24,000,000 ;  her  foreign  commerce  was  valued  at  i88,ooo,ooo 

♦Green,  History  of  English  People,  Vol.  IV,  p.  1805. 


ENGLISH  INDUSTRY  37 

and  the  output  of  her  manufactures  aggregated  £67,000,000, 
In  1841  the  £88,000,000  of  British  external  trade  had  in- 
creased to  £110,000,000.  That  it  showed  signs  of  lassitude 
after  that  year  can  hardly  be  attributed  to  the  working  of  the 
protective  system  which  had  built  up  the  great  manufactur- 
ing industry  which  permitted  the  enormous  expansion  of 
commerce  noted.  The  falling  off,  or,  rather,  the  stationary 
stage,  was  due  to  overproduction  occasioned  by  the  incapacity 
of  the  customers  of  the  British  manufacturers  to  absorb 
their  products.  It  was  this  apparent  inability  of  foreigners 
to  consume  which  gave  rise  to  the  idea  that  if  the  cost  of  pro- 
duction could  be  still  further  reduced  in  England  the  out- 
side world  would  be  able  to  take  larger  quantities  of  British 
products. 

Accordingly,  it  was  suggested  that  by  reducing  or  en- 
tirely abolishing  the  duties  on  corn  the  English  artisan  would 
always  be  supplied  with  cheap  bread.  This,  it  was  assumed, 
would  permit  the  manufacturer  to  pay  a  low  wage  to  his 
working  people  and  enable  him  to  produce  more  cheaply 
than  any  competitor  possibly  could.  By  adopting  this  course 
it  was  supposed  that  the  new  countries  which  might  under 
certain  conditions  aspire  to  manufacturing  rivalry  would  be 
effectually  barred  from  the  contest.  By  progressive  stages 
this  idea  was  expanded  into  the  theory  that  England  was 
fitted  by  nature  to  be  the  world's  workshop  and  that  the 
rest  of  mankind  would  be  more  benefited  by  depending  upon 
the  skill  and  resources  of  the  British  than  by  developing 
their  own. 

The  extraordinary  blunders  into  which  this  fallacious  ex- 
pectation led  the  philosophers,  economists  and  other  English 
writers  will  be  referred  to  more  extensively  in  another  place ; 
here  it  is  merely  desired  to  point  out  that  such  an  idea  could 
never  have  occurred  to  the  English  had  they  not  by  the 
means  outlined  in  the  preceding  pages  created  an  enormous 
manufacturing  industry  by  resorting  to  methods  which  they 
subsequently  sought  to  bring  into  contempt  in  order  to  dis- 


38  PROTECTION   AND   PROGRESS 

suade  other  people  from  imitating  them  and  profiting  by  the 
imitation. 

That  the  effort  partly  succeeded  the  student  of  economic 
history  is  aware.  The  means  adopted  by  the  propagandists 
of  the  free  trade  idea  were  numerous,  but  none  accomplished 
its  purpose  better  than  the  misrepresentation  deliberately 
resorted  to  in  order  to  completely  disguise  the  fact  that 
England  had  become  prosperous  by  artificially  promoting 
manufactures.  In  the  following  chapter  an  attempt  will  be 
made  to  show  the  extent  to  which  history  was  perverted  and 
how  unblushingly  the  teachings  and  writings  of  the  earlier 
English  economists  were  distorted  in  order  to  conviVice  a 
credulous  people  that  their  predecessors,  who  had  created  a 
vast  and  profitable  industry  and  made  their  country  the 
wealthiest  on  the  globe,  entertained  views  of  which  children 
might  well  be  ashamed. 


CHAPTER  II. 

BALANCE  OF  TRADE  THEORY. 

FREE  TRADE  MISREPRESENTATION  OF  THE  VIEWS  AND  OBJECTS 
OF  THE  MERCANTILISTS. 

Cobdenites  make  a  fetich  of  economics — Familiarity  of  the  Mer- 
cantilists with  the  true  functions  of  money — The  views  of 
Thomas  Mun — His  experience  with  the  Duke  of  Tuscany — The 
real  purpose  of  the  Mercantilists  was  to  develop  internal  and 
external  trade  and  to  promote  home  production — Smith,  though 
a  critic  of  the  Mercantilists,  held  practically  the  same  views 
regarding  money  as  the  objects  of  his  criticism — The  effects 
of  the  introduction  of  abundant  supplies  of  money  described 
by  the  Scotch  economist — Influence  on  Smith  of  Montesquieu's 
"Spirit  of  the  Laws" — The  Frenchman's  prediction  regarding 
the  future  part  to  be  played  by  credit — Professor  Nicholson's 
estimate  of  the  Mercantilists — The  balance  of  trade  theory — It 
is  held  to  be  sound  by  practical  men,  though  denied  by  scholastic 
economists — The  blunder  of  a  professional  statistician — The 
adverse  and  favorable  trade  balances  of  the  United  States — 
Export  and  import  tables  show  the  relations  of  debtors  and 
creditors — England's  prosperity  due  to  following  the  advice  of 
eminent  Mercantilists. 

It  seems  incredible  that  economic  writers  should  have 
attempted  to  misrepresent  the  opinions  of  their  predecessors 
in  order  to  insure  a  favorable  reception  for  their  own  doc- 
trines, but  it  is  impossible  to  escape  the  conclusion  that  the 
Cobdenites  are  amenable  to  the  charge  of  having  done  so. 
The  only  possible  excuse  or,  rather,  explanation  that  can  be 
offered  for  this  singular  course  is  that  the  writers  of  the 
Manchester  school  very  early  in  the  discussion  became  so 
enamored  of  their  ideas  that  they  made  a  fetich  of  them. 


40  PROTECTION  AND  PROGRESS 

They  ceased  to  view  matters  from  the  standpoint  of  practi- 
caHty  and  attempted  to  make  everything  square  with  their 
theories.  No  matter  how  illy  their  system  worked,  with 
the  intolerance  of  theologians  they  demanded  that  it  should 
not  be  questioned. 

It  is  a  matter  of  record  that  an  English  Prime  Min- 
ister told  a  delegation  of  hop-growers  who  waited  upon 
him  with  representations  that  their  industry  was  being 
ruined  by  foreign  competition  that  he  could  not  consider 
their  case  because  to  do  so  would  involve  the  commission 
of  an  economic  heresy.  The  subsequent  course  of  the  official 
alluded  to  raises  the  suspicion  that  he  employed  the  term 
heresy  sarcastically,  but  the  average  Cobdenite  accepted 
him  seriously  and  has  always  been  disposed  to  look  upon  any 
one  who  ventured  to  question  the  arguments  in  favor  of 
free  trade  very  much  as  a  pious  divine  regards  a  man  who 
rejects  the  teachings  of  his  church. 

The  natural  results  of  such  an  attitude  are  misconception 
and  misrepresentation ;  therefore  we  are  not  surprised  to 
find  men  whose  understanding  seems  perfectly  clear  except 
when  under  the  blighting  influence  of  Cobdenism,  making 
statements  which  are  denied  by  the  teachings  of  history  and 
every  day  experience. 

A  striking  illustration  of  this  tendency  to  pervert  is 
found  in  the  writings  of  one  of  the  most  distinguished 
champions  of  the  later  English  economic  system,  selected 
on  account  of  his  efficiency  and  devotion  to  the  cause  to 
write  the  sketch  of  free  trade  which  finds  a  place  in  the 
latest  edition  of  the  Encyclopaedia  Britannica.  In  this  article 
the  writer  attempts  to  account  for  the  adoption  of  the  protec- 
tive system  by  making  a  statement  which  has  absolutely  no 
foundation.  He  says:  "But  there  are  in  most  countries 
a  number  of  industries  the  continuity  of  which  governments 
have  attempted  and  still  attempt  to  promote  by  hindering 
the  free  entrance  of  foreign-made  articles  of  the  same  kind. 
It  will  be  found  that,  historically,  this  practice  has  had  its 


BALANCE   OF  TRADE  41 

origin  in  what  is  now  understood  to  be  a  delusion  as  to  the 
true  functions  of  the  currency."^ 

That  there  may  be  abundant  evidence  pointing  to  the 
existence  of  a  beHef  among  the  earher  protectionists  of  Eng- 
land that  a  favorable  balance  of  trade  tended  to  provide  the 
people  with  an  abundance  of  needed  specie  no  one  will  deny ; 
but  that  such  a  belief  displayed  ignorance  of  "the  true  func- 
tions of  currency,"  or  that  it  indicated  that  protective  meas- 
ures were  originally  resorted  to  for  the  purpose  of  securing 
supplies  of  the  precious  metals  cannot  be  demonstrated. 

In  the  light  of  later  investigations  it  appears  that  the 
adherents  of  the  so-called  mercantile  school  had  a  far  better 
knowledge  of  the  true  functions  of  money  than  their  Cob- 
denite  critics,  who  have  made  the  blunder  of  relegating  the 
mechanism  of  exchange  to  an  inferior  position,  although 
the  evidence  of  history  and  contemporary  observation  show 
conclusively  that  it  not  only  deserves  to  but  actually  does 
occupy  the  foremost  place  in  the  commercial  transactions  of 
mankind. 

The  Britannica  essayist  says :  "The  control  of  produc- 
tion and  trade  in  modern  Europe  is  historically  due  to  the 
development  of  what  Adam  Smith  called  the  mercantile  sys- 
tem, i.  e.,  the  effort  of  Government  to  secure  as  far  as  possible 
the  largest  amount  of  specie  within  the  country  whose  affairs 
it  administered." t  This  is  certainly  a  most  superficial  view 
of  the  motives  of  the  adherents  of  the  so-called  mercantile 
theory  and  suggests  the  idea  that  the  writer  who  entertained 
it  did  not  seriously  investigate  the  subject  he  discusses  in 
this  off-hand  fashion. 

It  would  be  impossible  to  derive  any  such  impression 
of  the  mercantilists  as  Rogers  seeks  to  convey,  from  Thomas 
Mun's  "English  Treasure  by  Foreign  Trade,"  referred  to 
bv  Adam  Smith  in  his  "Wealth  of  Nations"  and  termed 


*Rogers,  Article  on  "Free  Trade,"  Ency.  Brit, 
tibid. 


42  PROTECTION  AND   PROGRESS 

by  McCulloch  in  his  "Literature  of  Political  Economy"  the 
earliest  expositor  of  what  has  been  called  the  mercantile 
system  of  commercial  policy, 

Mun's  treatise  was  probably  written  and  privately  cir- 
culated about  1630,  and  made  its  first  appearance  in  print 
in  1664,  his  son  causing  its  publication  some  years  after 
his  father's  death.  An  excerpt  or  two  from  its  pages  will 
show  in  the  most  convincing  fashion  that  the  author  had  no 
delusions  regarding  the  true  functions  of  money,  but,  on  the 
contrary,  held  views  which  are  indorsed  by  the  business 
men  of  all  the  great  modern  commercial  nations  of  the 
world,  although  they  are  sneered  at  by  some  professional 
political  economists. 

Discussing  the  efifect  of  an  excessive  quantity  of  money 
within  a  kingdom  on  prices  Mun  observes  that  "although 
this  is  a  very  hard  lesson  for  some  great  landed  men  to  learn, 
yet  I  am  sure  it  is  a  true  lesson  for  all  the  land  to  observe, 
lest  when  we  have  gained  some  store  of  money  by  trade,  we 
lose  it  again  by  not  trading  with  our  money." 

He  then,  by  way  of  illustration,  proceeds  to  the  relation  of 
a  personal  experience  with  the  Duke  of  Tuscany,  from  whom 
he  had  borrowed  40,000  crowns  gratis  for  a  whole  year, 
although  the  Duke  knew  that  he  would  employ  the  money 
thus  borrowed  for  the  purpose  of  purchasing  wares  not  in 
Tuscany,  but  in  Turkey.  This  generosity  of  the  Duke  of 
Tuscany,  according  to  Mun,  was  extended  to  other  mer- 
chants, the  enlightened  Prince  understanding  perfectly  that 
the  money  would  in  the  course  of  trade  return  to  the  country 
from  which  it  was  shipped.  As  a  consequence  of  his  policy, 
Mun  tells  us,  "the  said  great  Duke  of  Tuscanie  and  his 
subjects"  were  much  enriched  by  the  continual  great  con- 
course of  merchants  from  all  the  states  of  the  neighbor 
Princes,  bringing  them  plenty  of  money  daily  to  supply 
their  wants  of  the  said  wares.  "And  thus  we  see,"  he  adds, 
"that  the  current  of  merchandize  which  carries  away  their 


BA^LANCE   OF  TRADE  43 

Treasure,  becomes  a  flowing  stream  to  fill  them  again  in  a 
greater  measure  with  money."* 

It  is  doing  violence  to  truth  to  say  that  the  views  of  the 
mercantilists  thus  outlined  bear  the  remotest  resemblance 
to  the  descriptions  of  them  furnished  by  Smith,  Rogers  and 
others.  They  do  not  indicate  a  desire  on  the  part  of  the 
mercantilists  to  secure  money  for  its  own  sake,  or  a  dullness 
of  perception  concerning  its  true  functions.  On  the  con- 
trary, the  evidence  is  overwhelming  that  the  mercantilists 
clearly  recognized  the  importance  of  the  precious  metals  as 
a  medium  of  exchange  and  that  their  policy  was  to  secure 
them  in  abundance  in  order  to  stimulate  internal  and  external 
trade. 

The  rebuke  administered  by  Mun  to  the  landed  gentry 
of  his  time,  who  were  disposed  to  hoard,  shows  that  the 
failing  was  not  shared  by  alert  merchants  of  the  mercantile 
school  who  took  good  care  when  they  "gained  some  store 
of  money  by  trade"  it  should  not  be  lost  by  failing  to  trade 
with  it. 

Although  the  mercantilists  laid  great  stress  on  the  value 
of  money  as  a  mechanism  of  exchange  it  can  hardly  be 
truthfully  affirmed  that  their  policy  revolved  about  its  ac- 
quisition. It  would  be  as  great  a  mistake  to  assume  that  the 
shrewd  modern  merchant  or  banker  whose  life  is  devoted 
to  making  money  in  piling  up  a  fortune  is  simply  aiming 
at  the  control  of  a  greater  or  less  number  of  gold  pieces 
as  it  is  to  suppose  that  the  mercantilists,  in  advocating  that 
a  country  should  sell  more  than  it  buys,  had  in  view  the 
absurd  purpose  of  bringing  into  the  country  in  which  they 
lived  a  vast  quantity  of  specie  to  lay  it  away  in  idleness. 
The  nineteenth  century  business  man  whose  daily  talk  and 
thoughts  are  of  making  money  does  not  desire  it  for  its  own 
sake  and  usually  does  not  retain  it  after  he  has  acquired  it. 
Unless  he  is  a  miser  he  sees  to  it  th^  it  continues  to  perform 

*Meen,  Treasure  by  Foreign  Trade,  pp.  24,  25. 


44         PROTECTION  AND  PROGRESS 

its  functions  as  a  measurer  and  exchanger  of  values.  This, 
according  to  the  testimony  cited,  was  also  the  aim  of  the 
mercantilists. 

It  is  rather  singular  that  writers  who  aim  at  reducing 
economics  to  an  exact  science  should  permit  themselves  to  be 
deceived  by  expressions,  when  the  opportunities  for  studying 
the  true  motives  of  men  are  so  abundant.  If  Professor 
Rogers  had  carefully  analyzed  the  views  of  Adam  Smith 
regarding  the  functions  of  money  he  would  speedily  have 
discovered  that  those  of  the  eminent  Scotchman  did  not  differ 
materially  from  those  held  by  the  mercantilists.  The  latter, 
as  Mun  expressly  declares,  sought  to  replenish  their  stocks 
of  the  precious  metals  in  order  that  the  work  of  exchanging 
products  might  be  facilitated.  That  an  increased  stock  of 
money  is  required  to  accomplish  such  an  object  Smith 
admits  in  numerous  parts  of  his  great  work.  In  one  place 
he  tells  us  that  "when  the  wealth  of  any  country  increases, 
when  the  annual  product  of  the  labor  becomes  gradually 
greater,  a  greater  quantity  of  coin  becomes  necessary  to 
circulate  a  greater  number  of  commodities."* 

As  England  did  not  produce  the  precious  metals,  ob- 
viously her  only  course  was  to  obtain  a  supply  of  them 
by  trading;  and  it  is  equally  clear  that  unless  the  English 
had  sold  more  than  they  bought  it  would  have  been  im- 
possible for  them  to  add  to  their  stock  of  coin.  Had  they 
imported  more  merchandise  than  they  sold  they  could  not 
have  prevented  the  diminution  of  their  supply  of  metallic 
money. 

If  the  theory  of  the  mercantilists  was  at  fault  Smith 
must  have  been  equally  astray,  for  although  he  may  have 
arrived  at  his  conclusions  in  a  different  fashion  there  can  be 
no  question  that  he  was  just  as  profoundly  impressed  with 
the  importance  of  money  as  a  medium  of  exchange  as  the 
most  extreme  exponent  of  the  ideas  of  the  mercantile  school. 


♦Smith,  Wealth  of  Nations,  Book  I,  Chap.  XI. 


BAj:.ANCE  OF  TRADE  45 

Not  only  does  Smith  carefully  indicate  the  necessity  of 
maintaining  abundant  supplies  of  coin  for  the  purposes  of 
promoting  internal  trade,  but  he  also,  in  almost  the  same 
terms  as  Mun,  points  out  that  it  is  highly  desirable  for  a 
nation  engaged  in  what  he  calls  the  round  about  foreign 
trade  to  secure  plenty  of  the  precious  metals.  In  a  passage, 
explaining  the  peculiar  value  of  the  trade  of  Portugal  to 
England,  he  says:  "The  great  annual  importation  of  gold 
and  silver  is  neither  for  the  purpose  of  plate  nor  of  coin, 
but  of  foreign  trade.  A  round  about  trade  of  foreign  con- 
sumption can  be  carried  on  more  advantageously  by  means 
of  these  metals  than  of  almost  any  other  goods,  *  *  *  In 
facilitating  all  the  different  round  about  trades  of  consump- 
tion which  are  carried  on  in  Great  Britain  consists  the 
principal  advantage  of  the  Portugal  trade ;  and  though  it  is 
not  a  capital  advantage,  it  is,  no  doubt,  a  considerable  one."* 

Adam  Smith  appears  to  have  had  no  doubts  about  the 
eflfects  of  the  introduction  of  fresh  supplies  of  the  precious 
metals  into  Europe.  He  noted  that  "since  the  discovery  of 
America  the  greater  part  of  Europe  has  been  much  im- 
proved. England,  Holland,  France  and  Germany,  even 
Sweden,  Denmark  and  Russia,  all  advanced  considerably 
both  in  agriculture  and  manufactures  ;"t  and  in  other  places 
he  minutely  describes  the  changes  which  resulted  from  the 
injection  of  vast  quantities  of  silver  into  the  existing  stocks, 
invariably  assuming  that  the  effect  was  to  stimulate  trade 
whenever  those  who  obtained  the  metal  were  sagacious 
enough  to  use  it  as  a  medium  of  exchange  instead  of  hoard- 
ing it,  as  some  foolishly  did,  or  of  diverting  it  from  its  proper 
use,  as  was  done  by  Spanish  grandees  who  consumed  it  in 
ostentatious  displays  of  plate  and  other  forms  of  ornamenta- 
tion. 

It  would  have  been  extraordinary  had  Smith  taken  any 

♦Smith,  Wealth  of  Nations,  Book  IV,  Chap.  VI. 
flbid,  Book  I,  Chap.  XI. 


46  PROTECTION  AND  PROGRESS 

other  view  of  the  important  part  played  by  money  than  that 
which  we  find  expressed  by  him  in  his  "Wealth  of  Nations." 
The  Scotchman  was  undoubtedly  a  close  student  and  admirer 
of  Montesquieu  and  followed  many  of  his  speculations  close- 
ly. The  celebrated  "Spirit  of  the  Laws"  was  a  new  book  when 
Smith  was  revolving  in  his  mind  the  project  of  an  English 
work  on  economics,  and  there  can  be  no  question  that  the 
Frenchman's  ideas  influenced  the  author  of  the  "Wealth 
of  Nations." 

It  has  been  sought  to  convey  the  idea  that  Smith  owes 
nothing  to  Montesquieu,  and  in  support  of  the  assumption 
the  fact  that  toward  the  close  of  his  life  he  was  working  on  a 
critique  of  the  "Spirit  of  the  Laws"  is  often  cited,  but  this 
proves  nothing.*  No  one  has  ever  contended  that  the 
Scotchman  was  not  a  strikingly  original  thinker.  His  book 
and  lectures  forbid  such  an  assumption ;  but  it  is  no  unusual 
thing  for  men  of  great  minds  to  frankly  accept  that  which 
commends  itself  to  them  as  sound ;  therefore  we  find  Smith 
repeating  in  another,  perhaps  a  better,  form,  statements  and 
thoughts  which  had  originally  appeared  in  the  "Spirit  of 
the  Laws." 

There  is  much  in  the  "Wealth  of  Nations"  that  suggests 
that  this  passage  from  Montesquieu  made  a  deep  impression 
on  Smith:  "The  bullion  drawn  from  American  mines,  and 
thence  sent  to  the  East,  has  greatly  promoted  the  naviga- 
tion of  the  European  nations ;  for  it  is  merchandise  which 
Europe  receives  in  exchange  from  America,  and  which  she 
sends  in  exchange  to  the  Indies,  A  prodigious  quantity  of 
gold  and  silver  is  therefore  an  advantage  when  we  consider 
these  metals  as  merchandise;  but  it  is  otherwise  when  we 
consider  them  as  a  sign,  because  their  abundance  gives  an 
alloy  to  their  quality  as  a  sign  which  is  chiefly  founded  on 
their  scarcity."! 

When  the  views  of  Smith  on  the  subject  of  money  are 


♦Ingram,  History  of  Political  Economy,  p.  92. 
•j-Montesquieu,  Spirit  of  the  Laws,  Book  XXII,  Chap.  VI. 


BALANCE   OF  TRADE  47 

examined  in  detail  it  will  be  seen  that  they  follow  those  of 
Montesquieu  closely,  not  only  in  recognizing  the  important 
part  played  by  the  metals  in  stimulating  a  round  about 
foreign  commerce  but  in  their  clear  perception  of  the  effect 
of  quantity  on  prices.  Montesquieu,  in  his  "Grandeur  and 
Decadence  of  the  Romans,"  emphasized  his  conviction  that 
the  lack  of  the  precious  metals  contributed  to  the  ruin  of  the 
Roman  State,  an  opinion  which  Smith  accepted  by  implica- 
tion, as  he  did  also  another  striking  deduction  of  the  French- 
man that  "when  civilized  nations  are  the  mistresses  of  the 
world,  gold  and  silver,  whether  they  draw  it  from  among 
themselves  or  fetch  it  from  the  mines,  must  increase  every 
day."* 

There  is  no  essential  difference  between  this  statement 
of  the  case  by  Montesquieu,  and  that  of  Smith,  who  tells  us 
that  "gold,  like  every  other  commodity,  is  always  somewhere 
or  other  to  be  got  for  its  value  by  those  who  have  that 
value  to  give  for  it."f 

It  would  be  absurd  to  assume  that  either  of  these  thinkers 
when  advancing  this  idea  meant  to  carry  the  impression 
that  gold  and  silver  were  desirable  for  their  own  sakes, 
because  in  other  places  they  indicate  clearly  that  the  worst 
possible  use  that  the  precious  metals  can  be  put  to  is  to 
devote  them  to  meretricious  ornamentation  or  to  hoard  them, 
and  thus  withdraw  them  from  the  channels  of  trade. 

In  order  to  still  more  firmly  establish  the  proposition  that 
there  is  no  foundation  for  the  assumption  that  correct  ideas 
regarding  the  functions  of  money  were  first  promulgated 
by  Smith,  the  fact  that  Montesquieu  clearly  defined  the  nature 
of  bank  notes  and  divined  the  future  of  the  credit  system 
which  would  be  developed  by  their  use  must  be  cited.  He 
tells  us  that  "the  companies  and  banks  established  in  many 
nations  have  put  a  finishing  stroke  to  the  lowering  of  gold 

♦Montesquieu,  Spirit  of  the  Laws,  Book  XXII,  Chap.  IV. 
fSmith,  Wealth  of  Nations,  Book  IV,  Chap.  VI. 


48  PROTECTION   AND   PROGRESS 

and  silver  as  a  sign  representative  of  riches;  for  by  new 
fictions  they  have  muhipHed  in  such  a  manner  the  signs  of 
wealth  that  gold  and  silver,  having  this  office  only  in  part, 
have  become  less  precious.  The  public  credit  serves  instead 
of  mines,  and  diminishes  the  profit  which  the  Spaniards  draw 
from  them."*  Changing  the  terminology  very  slightly, 
Smith  thus  restated  this  idea :  "When  paper  is  substituted  in 
the  room  of  gold  and  silver  money,  the  quantity  of  the 
materials,  tools  and  maintenance  which  the  whole  circulating 
capital  can  supply  can  be  increased  by  the  whole  value  of 
gold  and  silver  which  used  to  be  employed  in  purchasing 
them."t 

We  may  carry  our  investigations  much  further  back 
than  the  days  of  Montesquieu  or  Mun  and  find  that  the 
value  of  banks  and  notes  were  comprehended  by  those  who 
are  supposed  to  have  had  no  other  working  economic  rule 
than  that  of  bringing  money  into  the  State  and  keeping  it 
after  it  had  been  secured.  As  early  as  1659  Samuel  Lamb 
addressed  a  letter  to  Cromwell  in  which  he  urged  the  founda- 
tion of  a  bank  in  England  similar  to  that  in  operation  in 
Amsterdam.  This  latter  institution  came  into  existence  in 
1609.  At  a  much  earlier  period  banks  had  been  in  existence 
in  Italian  cities,  but  the  Dutch  creation  was  on  a  much 
greater  scale.  It  was  established  to  meet  the  inconvenience 
arising  from  the  circulation  of  currency  from  all  parts  of 
the  globe  and  to  accommodate  merchants  in  their  dealings. 
Any  one  making  a  deposit  of  gold  or  silver  received  notes 
for  the  amount,  less  a  small  commission,  and  these  notes 
commanded  a  premium  in  all  countries. 

Lamb,  perceiving  the  benefits  conferred  by  such  a  bank 
and  such  a  system  of  exchange,  set  forth  the  arguments 
in  its  favor  at  great  length.  It  would  puzzle  the  most  acute 
opponent  of  the  mercantile  school  to  discover  in  this  letter 


♦Montesquieu,  Spirit  of  the  Laws,  Book  XXI,  Chap.  XXII. 
t Smith,  Wealth  of  Nations,  Book  II,  Chap.  II. 


BALANCE   OF  TRADE  49 

any  trace  of  the  existence  of  a  belief  that  would  collide  with 
the  views  of  the  most  eminent  bankers  of  the  present  day. 
Nowhere  in  its  voluminous  pages  can  any  support  be  found 
for  the  curious  assumption  that  the  mercantilists  of  Lamb's 
time  sought  gold  and  silver  for  their  own  sake.  On  the  con- 
trary, every  line  shows  a  thorough  perception  of  the  fact 
that  the  writer  regarded  the  precious  metals  as  a  mere  in- 
strument for  promoting  commerce,  and  that  mankind  would 
be  most  benefited  by  making  that  instrument  as  accessible 
as  possible. 

A  modern  economist  who  has  devoted  some  attention  to 
the  question  here  reviewed  tells  us  that  "Adam  Smith  en- 
deavored to  show  not  that  the  nationalist  aspirations  of  the 
mercantilists  were  unworthy,  but  that  ,the  devices  adopted 
to  gain  their  ends  were  almost  in  all  cases  useless  or  hurt- 
ful."* He  also  tells  us  that  while  Smith  "attacked  both  the 
ideas  and  methods  of  the  mercantile  system,  it  is  to  be 
observed  that  he  was  far  from  stating  the  principles  of  free 
trade  in  the  simple  and  dogmatic  form  to  which  they  were 
afterward  reduced  for  popular  consumption."  But  it  seems 
to  us  that  it  is  a  case  of  the  professional  economists  having 
deceived  themselves  rather  than  the  vulgar. 

There  is  reason  for  believing  that  the  Scotch  economist, 
who  said  he  "thought  it  necessary,  though  at  the  hazard 
of  being  tedious,  to  examine  at  full  length  the  popular  notion 
that  wealth  consists  in  money,  or  in  gold  and  silver, "-j-  mis- 
directed his  efforts,  and  that  he  should  have  directed  himself 
to  the  learned,  for  it  seems  that  the  latter  have  adopted  more 
fantastic  notions  regarding  money  than  the  masses,  who 
instinctively  recognize  that  its  true  function  is  to  facilitate 
the  exchange  of  the  products  of  industry. 

There  are  notable  exceptions  among  the  later  economists 
who  have  avoided  the  indiscretion  of  misrepresenting  the 


♦Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  247. 
tSmith,  Wealth  of  Nations,  Book  IV,  Chap.  I. 
4 


50  PROTECTION  AND   PROGRESS 

mercantile  system,  but  not  many.  The  recent  work  of 
Professor  Nicholson  of  Edinburgh  University  discusses  the 
theories  of  the  mercantilists  in  a  reasonable  manner.  He 
says :  "It  does  not  appear  to  be  a  just  criticism  of  this  system 
to  deal  with  it  after  the  manner  of  Adam  Smith.  Money  was 
recognized  by  the  mercantilists  as  one  of  the  most  important 
instruments  of  exchange  and  thus  of  production.  Mediaeval 
progress  in  every  part  was  associated  with  the  adoption  and 
extension  of  a  money  economy.  Any  scarcity  of  money  at 
once  checked  development.  A  plentiful  supply  of  money 
in  the  middle  ages  was  as  necessary  for  the  national  welfare 
as  plentiful  bank  reserves  are  at  present.  The  regulations 
which  aimed  at  the  prevention  of  the  circulation  of  foreign 
money  and  provided  for  the  immediate  recoinage  were 
justifiable,  not  merely  for  the  lawful  seigniorage  claimed, 
but  also  for  the  preservation  of  the  national  coinage."* 

A  proper  consideration  of  this  statement  and  of  the  fact 
that  England  was  entirely  dependent  upon  other  countries 
for  her  supply  of  the  precious  metals  will  convince  any 
thoughtful  person  that  the  middle  age  economic  idea  that  it 
was  necessary  for  the  nation  to  sell  more  than  it  bought  in 
order  to  maintain  a  currency  was  not  an  unsound  one.  And, 
although  the  facts  are  somewhat  obscured  by  the  resort  to 
representative  money,  there  is  no  doubt  that  the  Middle  Age 
view  is  tenaciously  adhered  to  by  the  financiers  of  the  Eng- 
land of  today. 

While  some  college  professors,  and  others  who  ought  to 
know  better,  speak  derisively  of  those  who  contend  that  no 
nation  can  continue  to  prosper  which  persistently  buys  more 
than  it  sells,  it  is  noteworthy  that  men  of  brains  in  the 
financial  marts  of  Europe,  and  especially  in  the  great  money 
center  of  England,  are  constantly  watching  the  trade  reports 
in  order  to  guard  against  the  ill  results  of  unfavorable  bal- 
ances.   Professor  Nicholson  recognizes  this  when  he  says: 

♦Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  24^. 


BALANCE   OF  TRADE  51 

"The  case  of  foreign  trade  is  of  still  greater  importance, 
especially  in  such  a  country  as  England.  Any  excess  of  im- 
ports over  exports  (not  accounted  for  by  other  elements  of 
indebtedness)  may  create  an  unfavorable  balance  of  trade. 
Although  in  one  sense  an  unfavorable  balance  to  import- 
ers is  equally  favorable  to  exporters,  and  therefore  from  the 
point  of  view  of  national  gain  may  be  so  far  disregarded  in 
another  sense,  an  unfavorable  balance  may  mean  such  a 
foreign  drain  as  to  lead  to  a  financial  crisis."* 

When  we  compare  this  judicious  comment  upon  a  subject 
which  occupies  the  mind  of  the  financial  world  of  today  with 
the  crude  observations  of  a  professional  statistician  on  the 
alleged  workings  of  the  mercantile  theory  in  the  United 
States,  some  idea  is  gained  of  the  facility  with  which  erro- 
neous impressions  are  disseminated.  Citing  the  figures  of  the 
external  trade  of  this  country  Mulhall  says :  "The  foreign 
trade  of  1896  averaged  only  £5  per  inhabitant,  against  £18 
in  the  United  Kingdom.  It  is  manifest  that  trade  has  been 
cramped  and  hindered  in  all  directions  by  the  protective 
tariffs;  these  have  had  the  effect  of  stimulating  manufac- 
tures, but  at  an  enormous  cost  to  the  American  people. 
Suffice  it  to  compare  the  aggregate  of  imports  and  exports 
for  the  last  fourteen  years,  which  shows  that  there  has  been 
a  great  excess  of  exports,  or  in  other  words,  a  'balance  of 
trade'  largely  in  favor  of  the  United  States,  a  proof  that 
the  trade  with  foreign  countries  is  on  an  unsatisfactory  foot- 
ing, viz.:  imports  2104,  exports  2351,  surplus  exports  248 
millions  sterling.  The  old  fallacy  of  the  mercantile  system, 
which  is  still  in  force  among  protectionists,  supposed  that 
the  value  of  surplus  exports  came  back  in  bullion,  but  the 
official  tables  of  the  United  States  show  the  reverse."  f 

He  then  proceeds  to  show  that  although  our  surplus  ex- 
ports during  the  fourteen  years  ending  1896  amounted  to 

♦Nicholson,  Principles  of  Political  Economy,  Vol.  11,  p.  226. 
t  Mulhall,   Industries   and   Wealth  of  Nations. 


52  PROTECTION  AND  PROGRESS 

£248,000,000,  the  excess  of  gold  exports  for  the  period 
1871-1895  was  £133,000,000,  and  these  figures,  he  seems  to 
imagine,  conclusively  dispose  of  the  common  sense  assump- 
tion that  nations,  like  individuals,  cannot  live  beyond  their 
means. 

In  this  place  no  attempt  will  be  made  to  confute  Mul- 
hall's  assertion  that  trade  has  been  "cramped  and  hindered 
in  all  directions  in  the  United  States  by  protective  tariffs." 
That  part  of  the  discussion  is  reserved  for  another  chapter, 
in  which  the  statistician's  own  admissions  will  be  employed 
to  show  that  the  expansion  of  American  trade  has  been 
phenomenal  compared  with  that  of  other  countries.  Here 
we  shall  merely  examine  Mr,  Mulhall's  conclusion  that  the 
course  of  United  States  trade  completely  demonstrates  the 
fallacy  of  the  mercantile  theory  and  that  our  foreign  trade 
is  in  an  unsatisfactory  condition  because  it  shows  a  so- 
called  favorable  balance. 

To  dispose  of  Mr.  Mulhall's  arguments  we  need  merely 
ask  the  question :  Why  is  it  that  during  the  fourteen  years 
referred  to  by  him,  although  we  sold  £343,000,000  worth 
more  of  products  than  we  bought,  we  are  still  obliged  to 
part  with  large  quantities  of  specie?  To  this  question  there 
can  only  be  one  answer.  This  anomalous  condition  of  affairs 
existed  during  the  period  under  review  because  during  a 
previous  period  we  had  disregarded  the  teachings  of  com- 
mon sense  by  borrowing  heavily,  thus  mortgaging  our  future. 

It  will  be  noticed  that  Mr.  Mulhall  takes  as  a  period  for 
estimating  excess  of  exports  the  fourteen  years  ending  in 
1896.  Had  he  carried  his  investigations  further  back  he 
would  have  discovered  that  there  was  a  time  in  the  history  of 
our  commerce  when  the  imports  exceeded  the  exports,  and 
that  in  consequence  we  were  stripped  bare  of  specie.  In 
the  years  between  1847  ^"<^  1874  there  was  an  adverse  bal- 
ance against  us  of  $1,532,000,000.*     During  these  same 

♦United  States  Statistical  Abstract,  1897. 


BALANCE   OF  TRADE  53 

years  the  product  of  our  gold  and  silver  mines  reached 
$1,447,588,000.  According  to  the  implication  in  Mulhall's 
observation  on  the  mercantile  system  this  made  no  difference 
to  the  country  and  did  not  affect  the  national  welfare,  but 
those  who  know  the  sacrifices  made  to  obtain  specie  after 
the  breaking  out  of  our  Civil  War  hold  a  different  view. 

Americans  understand  clearly,  if  Mr.  Mulhall  does  not, 
that  the  excessive  exports  of  products  now  witnessed  must 
be  made  to  meet  obligations  incurred  during  the  period  when 
we  imported  more  than  we  exported  and  to  pay  interest  and 
dividends  on  investments  made  in  this  country  by  English- 
men and  other  foreigners  who  advanced  to  us,  not  specie, 
but  merchandise. 

Does  Mr.  Mulhall  fancy  that  if  the  conditions  which 
existed  until  1874,  and  even  later,  had  continued  down  to 
the  present  day  that  the  people  of  the  United  States  would 
be  in  better  condition  than  they  are  at  present  ?  Suppose  in- 
stead of  the  excess  of  exports  over  imports  of  £248,000,000 
since  1880,  to  which  Mulhall  refers,  there  had  been  $1,240,- 
000,000  more  goods  imported  into  the  country  than  were  ex- 
ported, or  to  put  the  case  as  strongly  as  possible  let  us  assume 
that  the  excess  of  exports  since  1874,  which  amounted  in 
round  figures  to  $2,500,000,000,  had  been  an  import  excess, 
what  would  be  our  position  today?  Would  it  not  be  one 
of  absolute  dependency  upon  foreigners?  And  ultimately 
would  it  not  have  resulted  in  a  permanent  excess  of  exports 
over  imports?  Is  it  conceivable  that  the  foreigner  would 
have  gone  on  forever  putting  more  into  the  country  than  he 
took  out  of  it? 

It  is  extraordinary  that  writers  of  the  school  to  which 
Mulhall  belongs  are  incapable  of  perceiving  that  under  pres- 
ent conditions  tables  of  exports  and  imports  are  the  indices 
of  the  relations  of  creditors  and  debtors  rather  than  a  mere 
record  of  exchange  of  commodities.  The  fact  that  the 
United  States  is  obliged  to  part  with  merchandise  to  the 
value  of  over  $250,000,000  in  a  single  year  more  than  she 


54  PROTECTION  AND  PROGRESS 

receives  in  return  in  the  shape  of  merchandise  or  bullion 
clearly  indicates  one  of  two  things,  either  that  she  is  placing 
other  peoples  under  obligation  to  her  or  that  she  is  repaying 
obligations  already  incurred. 

There  is  no  doubt  that  the  latter  is  the  case.  The  evi- 
dence is  overwhelming  that  we  are  heavily  indebted  to  for- 
eigners, especially  to  Englishmen.  The  extent  of  our  obliga- 
tions cannot  be  definitely  determined,  but  the  aggregate  is 
vast.  But  the  United  States  is  not  the  only  debtor  country. 
If  it  were  it  would  be  impossible  for  Great  Britain  to  con- 
tinue year  after  year  importing  hundreds  of  millions  of 
dollars  worth  more  of  merchandise  than  she  exports.  The 
fact  that  in  a  single  year  the  adverse  balance  of  trade  against 
the  United  Kingdom  exceeded  $650,000,000  is  conclusive 
evidence,  not  that  English  trade  is  in  a  healthy  condition  but 
that  some  time  in  the  past  she  loaned  money  or  goods  from 
which  loans  she  is  now  receiving  returns  in  the  shape  of 
interest  paid  in  merchandise,  or  that  the  principal  is  being 
repaid. 

Conversely,  the  excess  of  American  exports  over  imports 
shows  that  trade  is  in  a  healthy  condition  and  that  we  are 
paying  our  interest  and  perhaps  part  of  the  principal  of  what 
we  owe  and  refusing  to  incur  further  obligations.  In  short, 
instead  of  the  trade  conditions  of  the  United  States  furnish- 
ing a  refutation  of  the  theory  of  the  mercantilists  that  an 
adverse  balance  is  something  to  be  avoided,  it  confirms  its 
soundness  by  establishing  the  fact  that  the  nation  which 
attempts  to  disregard  the  maxim  that  more  must  be  produced 
than  is  consumed  in  order  to  create  wealth  will  certainly 
come  to  grief. 

The  assaults  on  the  mercantilists  have  not  been  confined 
to  misrepresentations  of  their  views  concerning  the  balance 
of  trade.  There  has  also  been  a  consistent  attempt  to  create 
the  impression  that  their  object  was  to  cut  off  all  external 
trade,  the  implication  being  that  they  were  foolish  enough 
to  imagine  that  benefit  would  result  from  such  a  course. 


BALANCE   OF   TRADE  55 

Even  so  fair  a  writer  as  Cunningham,  in  his  effort  to  state 
in  a  concise  form  the  opinions  held  by  the  predecessors  of 
Cobden,  helps  to  add  to  this  false  impression  when  he  tells 
us  that  "the  mercantilists,  like  the  bullionists,  aimed  at  in- 
creasing the  treasure  in  the  country,  but  they  adopted  en- 
tirely different  measures  to  this  end.  Instead  of  trying  to 
legislate  directly  for  the  precious  metals,  they  held  that,  by 
legislating  for  the  trade  in  commodities,  they  could  induce 
conditions  in  which  the  precious  metals  would  naturally  flow 
into  this  country  (Great  Britain).  If  we  sold  a  large  quan- 
tity of  goods  to  other  lands,  and  bought  very  few  of  their 
products,  they  would  be  bound  to  pay  us  a  balance  in  bullion. 
Hence  it  appears  that  by  using  expedients  to  limit  the  quan- 
tity and  value  of  our  imports,  and  to  increase  the  value  and 
quantity  of  our  exports,  there  would  be  a  balance  of  trade 
which  could  only  be  defrayed  by  payments  in  bullion  from 
abroad.  And  thus  recast,  the  effort  to  procure  treasure 
ramified  out  in  many  directions,  but  it  should  not  be  forgot- 
ten that  the  fundamental  reason  for  desiring  bullion  was  the 
political  one  of  acquiring  treasure.  Those  who  were  most 
decided  about  the  advantage  of  procuring  treasure  were 
equally  clear  that  gold  and  silver  were  only  valuable  by  con- 
vention and  not  in  their  own  nature ;  and  in  so  far  as  mere 
economics  were  concerned,  there  was  no  tendency  to  regard 
bullion  as  a  specially  important  form  of  riches  or  wealth."* 

Here  we  have  a  frank  statement  that  the  mercantilists 
were,  not  possessed  by  the  vulgar  notion  that  money  is  the 
most  desirable  form  of  wealth,  and  a  qualified  admission 
that  they  were  not  entirely  wrong  in  assuming  that  it  was 
good  policy  for  a  nation  to  obtain  a  store  of  treasure,  but 
Cunningham  was  manifestly  in  error  in  asserting  that  the 
mercantilists  aimed  at  restricting  all  kinds  of  imports  in 
order  to  bring  about  such  a  result. 

As  the  exponents  of  the  theory  criticised  by  Cunning- 

*Cunningham,  Outlines  of  English  Industrial  History,  p.   128. 


56  PROTECTION  AND   PROGRESS 

ham  and  other  free  traders  were  as  capable  of  expressing 
their  views  in  good  EngHsh  as  their  critics,  it  may  be  best 
to  see  what  they  have  to  say  for  themselves.  Resorting  again 
to  the  pages  of  Mun's  treatise,  we  find  him  discussing  the 
question  of  imports  and  exports  in  this  fashion :  "The  com- 
monwealth shall  decHne  and  grow  poor  by  a  disorder  in  the 
people  when,  through  pride  and  other  excesses,  they  do  con- 
sume more  foreign  wares  in  value  than  the  wealth  of  the 
Kingdom  can  satisfy  and  pay  by  the  exportation  of  our  own 
commodities,  which  is  the  very  quality  of  an  unthrift  who 
spends  beyond  his  means."* 

The  modern  Cobdenite,  misled  by  the  fact  that  the  British 
now  import  more  than  they  export,  may  find  a  flaw  in  this 
philosophical  observation,  but  it  is  reasonably  certain  that  if 
England  had  not  proceeded  along  the  lines  indicated  by  Mun 
her  subsequent  commercial  experience  would  not  have  ex- 
cited the  jealousy  of  the  rest  of  the  world. 

It  was  well  for  the  English  that  they  accepted  the  guid- 
ance of  men  who  spoke  in  this  strain :  "Lastly  in  all  things 
we  must  endeavor  to  make  the  most  we  can  of  our  own 
whether  it  be  natural  or  artificial.  And  forsomuch  as  the 
people  who  live  by  the  arts  are  far  more  in  number  than 
they  who  are  masters  of  the  fruits,  we  ought  the  more  care- 
fully to  maintain  those  endeavors  of  the  multitude,  in  whom 
doth  consist  the  greatest  strength  and  riches  both  of  King 
and  Kingdom ;  for  where  the  people  are  many,  and  the  arts 
good,  there  the  traffic  must  be  great  and  the  country  rich. 
The  Italians  employ  a  greater  number  of  people  and  get 
more  money  by  their  industry  and  manufactures  of  the  raw 
silks  of  the  Kingdom  of  Cicilia  than  the  King  of  Spain  and 
his  subjects  have  by  the  revenue  of  this  rich  commodity."  f 

Assume  for  a  moment  that  the  views  of  the  mercantilists 
had  not  prevailed  and  that  Englishmen  of  the  seventeenth 

*Mun,  Treasure  by  Foreign  Trade,  p.  37. 
flbld,  p.  17. 


BALANCE   OF  TRADE  57 

and  eighteenth  centuries  had  imitated  the  example  of  Spain 
— -which  country  imported  to  excess  with  disastrous  results 
— does  anyone  fancy  in  that  event  that  the  British  would 
have  been  prepared  toward  the  close  of  the  first  half  of  the 
nineteenth  century  to  do  commercial  battle  with  the  rest  of 
the  world? 

What  ground  is  there  for  believing  that  the  English,  who 
were  a  phenomenally  backward  people  until  they  imported 
foreign  artisans  to  instruct  and  pioneer  the  way  for  them 
in  manufacturing,  would  have  developed  an  industry  of 
their  own  without  artificial  stimulus?  Is  there  not  every 
reason  for  assuming  that  if  Edward  and  his  successors  had 
decided  that  as  the  Flemings  could  make  cloth  cheaper  than 
the  British  it  would  be  wiser  for  their  subjects  to  wear  im- 
ported woolens,  that  they  would  still  be  dependent  upon 
strangers  for  such  articles?  What  foundation  is  there  for 
the  assumption  that  the  English  could  have  achieved 
supremacy  on  the  sea  if  the  navigation  act  had  not  been 
resorted  to?  Is  there  a  single  instance  recorded  in  history  of 
a  nation,  after  having  obtained  such  a  position  as  that 
reached  by  the  Dutch,  being  dislodged  except  by  such 
methods  as  those  adopted  by  England? 

These  are  the  questions  which  suggest  themselves  to 
every  candid  investigator  of  this  subject,  and  when  an 
answer  is  found,  as  it  may  be  in  the  pages  of  history,  it 
discloses  that  the  ancestors  of  the  Cobdenites  were  not  fools, 
although  the  Manchester  school  of  economists  have  diligently 
striven  to  make  them  appear  as  such.  Their  teachings,  their 
acts,  and,  above  all,  the  result,  show  that  those  ancestors 
were  shrewd  men  who  instinctively  adopted  the  only  method 
by  which  they  could  advance  their  country  commercially. 

It  is  not  meant  by  this  that  the  mercantilists  committed 
no  errors — doubtless  many  blunders  can  be  charged  to  them 
— but  that  their  policy,  on  the  whole,  was  conducive  to 
national  progress  seems  indisputable.  No  matter  what  pres- 
ent conditions  may  appear  to  suggest,  it  is  obvious  that 


58  PROTECTION  AND  PROGRESS 

nations,  like  men,  have  their  periods  of  infancy,  adolescence 
and  maturity,  and  perhaps  final  decrepitude  and  death, 
although  modern  optimism  has  suggested  that  the  resources 
of  commerce  are  such  that  this  fate  may  be  averted  by  intel- 
ligent peoples. 

If  the  British,  in  the  infantile  stage  of  their  growth,  had 
wedded  themselves  to  such  a  theory  as  that  urged  by  the 
economists  of  the  Manchester  school,  how  could  they  have 
emerged  from  the  comparative  barbarism  in  which  they  were 
plunged  ?  Had  a  mediaeval  Cobden  dissuaded  Edward  from 
his  attempt  to  create  a  woolen  industry  Britain  might  have 
remained  a  pastoral  country.  If  the  British  had  been 
thoroughly  inoculated  with  the  absurd  idea  that  it  is  an 
economic  sin  to  artificially  stimulate  a  manufacturing  in- 
dustry they  might  have  held  a  position  similar  to  that  which 
Spain  occupies  today.  It  was  protection  that  saved  the 
English  from  this  fate,  and  which  for  a  time  has  enabled  their 
country  to  play  the  leading  role  in  the  commercial  affairs 
of  the  world. 


CHAPTER  III. 

FREE  TRADE  IN  ENGLAND. 

CAUSES    THAT    LED    TO    THE    ABROGATION    OF     THE     BRITISH 
CORN  LAWS. 

The  corn  law  agitation — The  British  not  dissatisfied  with  the 
results  of  protection — Movement  due  to  a  widespread  depres- 
sion caused  by  overproduction — Appearance  of  Cobden  on  the 
scene — Arguments  to  remove  the  objections  of  the  English 
agricultural  classes — Free  traders  convinced  that  English  farm- 
ers had  ample  natural  protection — High  prices  promised  as  a 
result  of  permanent  prosperity — The  warning  of  the  Duke  of 
Wellington — The  consequence  of  improved  communication  not 
foreseen  by  Cobden  and  his  followers — Free  traders  carry 
water  on  both  shoulders — A  cheap  loaf  for  the  workingman 
and  high  prices  for  the  farmer's  wheat  are  promised  by  them 
— The  world's  markets  glutted  with  English  manufacturers  on 
the  eve  of  the  repeal  of  the  corn  laws — Effect  of  the  scarcity 
of  the  precious  metals — No  claim  made  during  the  '40s  that 
protection  repressed  production — McCulloch's  assertion  that 
the  English  were  superior  in  skill  to  all  other  peoples  and  that 
none  could  hope  to  rival  them — The  attempt  of  the  Cobdenites 
to  misrepresent  the  facts  of  history — The  Manchester  school 
responsible  for  the  propagation  of  the  theory  that  wages  and 
cost  of  living  are  intimately  connected — Why  the  English  manu- 
facturer aimed  at  securing  cheap  food  supplies — The  part 
played  by  the  potato  famine  and  successive  bad  crops  in  creat- 
ing converts  to  Cobdenism — Free  trade  not  a  logical  develop- 
ment, but  the  result  of  adventitious  circumstances — What  might 
have  happened  had  gold  been  discovered  in  California  a  few 
years  earlier. 

In  the  preceding  chapter  it  was  shown  that  the  charges 
made  against  the  mercantilists  by  the  Cobdenites  are  ground- 


6o  PROTECTION  AND  PROGRESS 

less  and  that  instead  of  being  obnoxious  to  the  imputation 
of  commercial  imbecility  the  Englishmen  of  the  generations 
and  centuries  prior  to  the  abrogation  of  the  corn  laws  were 
a  discerning  people  who  had  adopted  the  only  policy  which 
could  be  depended  upon  to  give  them  a  place  in  the  race  for 
commercial  supremacy.  In  the  pages  immediately  following 
proof  will  be  furnished  that  the  accusations  to  which  refer- 
ence is  made  w-ere  an  afterthought  and  that  at  the  time  of 
the  change  of  the  incidence  of  taxation,  which  resulted  in 
the  shifting  of  the  burden  to  agriculture,  under  the  pretense 
that  the  nation  would  be  generally  benefited  by  such  a 
course,  Englishmen  in  every  grade  of  life  were  so  well  satis- 
fied W'ith  the  outcome  of  the  policy  of  protection  that  they 
assumed  airs  of  superiority  and  entertained  beliefs  which, 
in  the  sequel,  will  be  proved  erroneous. 

In  order  to  obtain  a  just  view  of  the  motives  which 
prompted  the  abrogation  of  the  corn  laws  we  must  turn 
to  the  earlier  writings  and  admissions  of  the  followers  of 
the  Manchester  school.  If  these  are  minutely  examined  it 
will  be  seen  that  in  its  inception  the  so-called  free  trade 
movement  was  not  so  much  an  assault  on  the  principle  of 
protection  as  a  recognition  of  the  fact  that  the  English  manu- 
facturing industry  had  attained  such  a  position  that  further 
extension  would  be  impossible  unless  other  peoples  who  had 
shown  latent  capacities  of  the  same  kind  as  the  English 
could  be  persuaded  that  their  best  interests  would  be  served 
by  accepting  the  role  of  producers  of  food  and  raw  material 
for  the  British. 

When  the  proposition  to  repeal  the  corn  laws  was  first 
mooted  England  was  in  the  throes  of  a  depression  which 
was  mainly  attributed  to  over-production,  but  which  suc- 
ceeding events  demonstrated  was  the  result  of  under-con- 
sumption.  Sir  Robert  Peel,  the  Prime  Minister  of  England 
at  the  time,  who  in  the  early  stages  of  the  discussion  was  on 
the  side  of  the  agricultural  interest,  had  attempted  to  account 
for  the  existing  troubles  by  showing  that  improved  ma- 


FREE  TRADE  IN  ENGLAND.  6i 

chinery  was  creating  goods  faster  than  the  world  could 
absorb  them. 

This  view  was  combated  by  Richard  Cobden  in  the 
House  of  Commons.  On  the  8th  of  July,  1842,  the  state  of 
the  country  being  under  consideration,  Cobden,  in  a  speech, 
"censured  Mr.  Peel  for  affecting  to  believe  that  the  pre- 
vailing distress  was  due  to  the  introduction  of  machinery. 
He  said  machinery  does  not  throw  people  out  of  work  if  the 
perfection  and  introduction  to  practical  use  are  gradual. 
He  called  upon  Sir  Robert  Peel  not  to  treat  the  subject  with 
quibbles  about  machinery,  nor  as  a  mere  Manchester  ques- 
tion, but  to  look  at  it  in  connection  with  the  whole  condition 
of  the  country."* 

From  this  and  similar  early  utterances  of  Cobden  the 
writer  who  made  the  above  condensation  of  the  free  trader's 
speech  has  assumed  that  the  apparently  broad  and  liberal 
view^s  of  the  later  adherents  of  the  Manchester  school  were 
openly  promulgated  in  England  when  the  anti-corn  law 
agitation  was  in  progress.  An  examination  of  the  arguments 
resorted  to  by  Cobden  and  his  associates  and  followers  dis- 
closes that  an  entirely  different  campaign  was  made,  and 
absolutely  forbids  the  assumption  that  the  people  clearly 
understood  the  question.  The  idea  that  British  agriculture 
would  be  imperiled  by  lowering  or  entirely  removing  the 
duties  from  corn  was  scouted  and  those  who  raised  a  warn- 
ing voice  were  derided. 

Two  years  later  than  the  date  of  the  delivery  of  the 
speech  from  which  the  above  quotation  is  taken  Mr.  Cobden 
made  another  address,  which  Trumbull  also  condenses  in 
this  fashion :  "Cobden  then  went  on  to  show  that  every 
prediction  about  corn  had  formerly  been  uttered  about  wool, 
'but,'  he  inquired,  'is  there  any  lack  of  mutton  ?  Are  all  the 
sheep  dogs  dead,  and  all  the  shepherds  in  the  poorhouse? 
So  far  from  it  that  when  wool  was  at  the  highest  price  the 

*Trumbull,  Free  Trade  Struggle  in  England,  p.  86. 


62  PROTECTION  AND  PROGRESS 

largest  quantity  had  been  imported ;  when  at  the  lowest  price 
the  smallest  quantity.'  This  apparent  paradox  he  explained 
by  showing  that  ability  to  buy  is  an  important  agent  in  fix- 
ing prices.  He  condensed  his  explanation  into  the  following 
sentence :  'A  high  price  from  prosperity  may  be  permanent ; 
a  high  price  from  scarcity  must  always  be  precarious.'  This 
was  new  learning  to  the  House  of  Commons  and  many  of  the 
members  were  startled  by  the  doctrine.  Peel  himself  became 
very  thoughtful  under  the  lesson,  and  afterward  acknowl- 
edged that  the  lesson  was  very  new  to  him."* 

This  is  not  the  place  to  inquire  whether  Cobden's  trite 
sentence  fitted  the  condition  of  affairs  existing  when  his 
speech  was  made.  The  object  in  reproducing  the  quotation 
here  is  merely  to  show  that  Cobden  and  others  had  deceived 
themselves  regarding  the  possible  consequences  that  might 
result  to  agriculture  from  the  changes  proposed  and  that  it 
would  have  been  absolutely  impossible  to  have  persuaded  the 
people  of  England  to  throw  down  the  barriers  of  protection 
if  they  could  have  foreseen  that  free  trade,  so-called,  would 
make  the  Kingdom  dependent  upon  the  outside  world  for  its 
supplies  of  food. 

It  was  absolutely  necessary  for  Cobden  and  his  adherents 
in  order  to  win  success  to  completely  remove  the  apprehen- 
sions of  that  class  whose  fears  were  voiced  by  the  Duke  of 
Wellington  in  a  speech  delivered  in  the  House  of  Lords  in 
1842  in  which  "he  earnestly  recommended  their  lordships 
not  to  lend  themselves  to  the  destruction  of  our  native  culti- 
vation. Its  encouragement,"  he  said,  "was  of  the  utmost 
and  deepest  importance  to  all  classes,  and  he  earnestly 
begged  of  them  not  to  consent  to  any  measure  which  would 
injure  the  cultivation  of  their  own  soil."  f 

Later  on  it  will  be  shown  that  the  Duke,  whose  fears  were 
ridiculed  by  the  new  economists,  had  a  deeper  insight  into 

♦Trumbull,  Free  Trade  Struggle  in  England,  p.  159. 
flbid,  p.  54. 


FREE  TRADE  IN  ENGLAND.  63 

the  future  than  his  ghb  critics,  but  the  masses  were  easily 
persuaded  to  consider  them  groundless.  This  is  not  sur- 
prising when  the  then  existing  opinion  regarding  the  effi- 
cacy of  natural  protection  is  considered.  Adam  Smith  had 
taught  the  Cobdenites  to  believe,  or,  at  least,  they  adopted 
without  challenge  the  view  expressed  by  him  sixty-five  years 
earlier,  that  "even  the  free  importation  of  foreign  corn  could 
very  little  affect  the  interests  of  the  farmers  of  Great 
Britain."*  He  thought  that  "if  the  free  importation  of 
foreign  manufactures  were  permitted  several  of  the  home 
manufactures  would  probably  suffer,  and  some  of  them  per- 
haps go  to  ruin  altogether,  and  that  a  considerable  part  of 
the  stock  and  industry  employed  in  them  would  be  forced 
to  find  some  other  employment.  But  the  freest  importation 
of  the  rude  products  of  the  soil  could  have  no  such  effect 
upon  the  agriculture  of  the  country."  f 

There  is  no  doubt  that  in  the  '40s  this  view  appealed 
to  most  Englishmen  who  gave  the  subject  attention.  It  was 
freely  expressed  by  all  the  anti-corn  laws  agitators,  and  Mill, 
in  his  carefully  thought  out  system  of  political  economy,  gave 
the  reasons  in  detail  for  the  existing  belief.  "In  the  first 
place,"  he  said,  "the  foreign  regions  from  which  corn  can 
be  imported  do  not  comprise  the  whole  globe,  but  those 
parts  of  it  almost  alone  which  are  in  the  immediate  neighbor- 
hood of  coasts  and  navigable  rivers.  *  *  *  To  obtain  aux- 
iliary supplies  of  corn  from  the  interior  in  any  abundance 
would  in  the  existing  state  of  communications  be  hopeless. 
By  improved  roads,  and  often  by  canals  and  railways,  the  ob- 
stacles will  be  so  reduced  as  not  to  be  insuperable ;  but  this 
is  slow  progress ;  in  all  the  food-exporting  countries  except 
America,  a  very  slow  progress ;  and  one  which  cannot  keep 
pace  with  population,  unless  the  increase  of  the  last  is  very 
effectually  restrained."! 

♦Smith,  Wealth  of  Nations,  Book  IV,  Chap.  I. 

flbid. 

JMill,  Principles  of  Political  Economy,  Book  I,  Chap.   XIII. 


64  PROTECTION   AND   PROGRESS 

In  another  place  the  same  author  says :  "There  is  every 
reason  to  expect  that  under  the  virtually  free  importation 
of  agricultural  produce  *  *  *  the  price  of  food,  if  pop- 
ulation goes  on  increasing,  will  gradually  but  steadily  rise ; 
though  this  effect  may  for  a  time  be  postponed  by  the  strong 
current  which  in  this  country  has  set  in  toward  the  improve- 
ment of  agricultural  science  and  its  increased  application  to 
practice."* 

Such  arguments  as  these  disarmed  the  opposition  of  the 
landed  interest.  Its  members  and  sympathizers  were  finally 
convinced  that  they  had  nothing  to  fear  from  foreign  com- 
petition, and  they  fondly  imagined  that  the  creation  of  a 
great  working  class  by  increasing  the  number  of  consumers 
would  strengthen  rather  than  weaken  the  monopoly  they 
enjoyed.  This  assumption  seems  inconsistent  with  the 
promise  of  the  cheap  loaf  held  out  to  the  workingmen  in  the 
towns,  but  it  was  not  a  time  when  arguments  could  be  made 
symmetrical ;  that  was  reserved  for  the  economists  of  a  later 
period.  It  was  the  business  of  Cobden  and  those  working 
with  him  to  get  votes,  and  it  did  not  matter  much  to  them  if 
the  assertions  made  by  them  did  not  harmonize,  or  perhaps  it 
would  be  fairer  to  assume  that  they  believed  all  they  said, 
no  matter  how  irreconcilable  some  of  their  statements  may 
appear  to  us  at  this  day. 

That  they  honestly  deceived  themselves  may  be  inferred 
from  an  opinion  expressed  by  J.  Thorold  Rogers  a  quarter 
of  a  century  after  the  great  triumph  of  Cobden  had  been 
achieved.  He  declared  that  in  England  :  "Since  the  repeal  of 
the  corn  laws  the  price  of  agricultural  land  has  steadily  risen ; 
for  though  the  average  price  of  wheat  has  fallen,  that  of 
other  kinds  of  grain,  as  is  found  by  the  tithe  averages,  has 
risen,  while  meat  and  dairy  products  have  more  than  doubled 
in  value  since  the  period  referred  to,"  and  in  the  same  con- 
nection he  remarked :    "It  is  probable  that,  on  the  whole,  suc- 

*Mill,  Principles  of  Political  Economy,  Book  V,  Chap.  IV. 


FREE  TRADE  IN  ENGLAND.  65 

cessftil  agriculture,  that  is,  the  production  of  the  largest 
quantity  in  value  from  the  soil  at  least  cost,  has  made  more 
progress  in  the  United  Kingdom  than  in  any  other  country."* 

Here  again  comment  on  the  errors  made  by  the  writer 
must  be  deferred,  the  present  object  being  merely  to  indicate 
the  strength  and  prevalence  of  the  belief  that  English  agri- 
culture was  thoroughly  entrenched,  from  which  the  infer- 
ence may  be  fairly  drawn  that  had  a  contrary  opinion  pre- 
vailed the  so-called  free  trade  experiment  would  never  have 
been  made. 

Having  outlined  the  processes  by  which  hostile  opinion 
was  disarmed  it  now  becomes  necessary  to  examine  more 
minutely  the  expectations  of  the  Manchester  school.  As 
a  preliminary  to  an  investigation  of  this  kind  it  may  be  well 
to  briefly  sketch  the  conditions  existing  in  England  when  the 
agitation  against  the  corn  laws  began.  It  appears  from  the 
Parliamentary  reports  and  the  statements  of  historians  that 
in  1842  there  was  a  widespread  depression  which  affected 
every  branch  of  industry  in  Great  Britain.  On  the  loth  of 
March  of  that  year,  "Mr.  Cobden  brought  on  his  motion  for  a 
select  committee  to  inquire  into  the  course  of  agricultural 
distress,"  contending  "that  the  corn  laws  were  an  injury  in- 
stead of  a  benefit  to  the  farmers  and  farm  laborers"  and 
offering  to  demonstrate  the  soundness  of  his  view  if  they 
wOuld  grant  him  a  committee. -j- 

From  Green  we  learn  that  after  the  peace  which  closed 
the  Napoleonic  wars  a  rapid  development  of  English  in- 
dustry occurred  which  "for  a  time  ran  ahead  of  the  world's 
demands ;  the  markets  at  home  and  abroad  were  glutted  with 
unsalable  goods  and  mills  and  manufactures  were  brought  to 
a  standstill."  J 

This  condition  was  not  materially  improved  during  the 


♦Rogers,  Article  "Free  Trade,"   Ency.  Brit. 
j-Trumbull,  Free  Trade  Struggle  in  England,  p.  196. 
I  Green,  History  of  English  People,  Vol.  IV,  p.  1829. 

a 


66  PROTECTION   AND   PROGRESS 

following  years.  The  English  continued  to  add  to  their 
facilities  for  manufacturing,  and  as  they  had  long  out- 
stripped the  home  demand  the  necessity  of  securing  addi- 
tional markets  and  of  holding  those  already  obtained  became 
very  pressing.  As  may  be  inferred  from  Green's  remark, 
British  manufacturers  had  already  become  possessed  of  the 
idea  that  in  some  way  they  were  peculiarly  fitted  to  fashion 
the  rude  products  of  the  earth  into  finished  articles,  but  they 
were  embarrassed  by  the  disposition  manifested  by  some 
foreigners,  notably  Americans,  to  provide  themselves  with 
a  home  manufacturing  industry,  protective  tariffs  being 
resorted  to  for  the  furtherance  of  that  object. 

These  efforts  were  looked  upon  with  contempt  by  the 
English  of  all  classes,  who  were  firmly  convinced  that  it 
would  be  impossible  for  their  feeble  rivals  to  seriously  com- 
pete with  the  firmly  established  industries  of  Great  Britain 
without  resorting  to  tariffs  which  would  prove  absolutely 
prohibitory,  and  the  result  in  a  measure  seemed  to  justify 
this  opinion. 

Owing  to  lack  of  firmness  opportunities  were  afforded 
the  English  to  effectually  discourage  manufacturing  in  the 
United  States  and  other  countries,  and  at  the  time  of  the 
corn  law  agitation  England  was  in  such  a  position  that  she 
could  undersell  rivals  even  when  the  latter  were  accorded 
what  seems  at  this  time  a  fair  degree  of  protection. 

But  in  spite  of  her  admitted  superiority  in  the  industrial 
field  England  in  the  early  '40s  was  suffering  from  the 
effects  of  an  extreme  depression,  which,  as  we  have  seen, 
was  attributed  by  such  men  as  Sir  Robert  Peel  to  the  rapid 
improvement  of  machinery  and  consequent  overproduction 
of  manufactured  articles.  There  was,  however,  another  and 
much  more  potent  cause  operating  which  seems  to  have 
attracted  little  attention  at  the  time,  and  as  yet  is  but  im- 
perfectly understood,  although  there  is  a  growing  disposi- 
tion to  recognize  the  fact  that  it  was  the  removal  of  this 


FREE  TRADE  IN  ENGLAND.  67 

cause  which  contributed  to  the  subsequent  rapid  expansion 
of  EngHsh  industry. 

From  the  budget  speeches  of  EngHsh  Ministers  of  the 
time  and  other  sources  the  fact  may  be  gathered  that  the 
scarcity  of  the  precious  metals  was  becoming  embarrassing. 
Mr.  Gladstone  is  quoted  by  a  writer  who  seeks  to  make  a 
point  against  the  mercantile  system  as  bewailing  the  drain  of 
gold  and  sorrowfully  announcing  to  the  House  of  Commons 
in  1842  that  since  the  beginning  of  the  year  three  millions 
sterling  had  been  sent  to  America  in  payment  for  the  prod- 
ucts of  that  country. 

Mr.  Gladstone  may  have  been  the  victim  of  "an  ancient 
superstition"  when  he  referred  to  the  drain  of  gold  in  a 
fashion  suggesting  that  he  thought  it  an  evil,  but  whatever 
views  he  entertained  regarding  the  effects  of  such  a  move- 
ment one  thing  is  obvious,  namely,  that  specie  was  becoming 
scarce  in  England  or  he  would  not  have  expressed  apprehen- 
sion. That  such  was  the  case  we  have  plenty  of  testimony 
independent  of  budget  statements. 

According  to  Soetbeer  the  annual  production  of  the 
precious  metals,  which  averaged  about  $52,000,000  at  the 
opening  of  the  nineteenth  century,  had  declined  to  $32,500,- 
000  per  annum  in  1846.  This  diminution  occurred  concur- 
rently with  a  great  expansion  of  manufactures  and  commerce 
due  to  the  improvements  in  machinery  which  followed  the 
employment  of  steam  energy.  Consequently,  in  addition  to 
the  evil  results  entailed  by  an  appreciating  currency,  which 
are  manifested  in  the  falling  prices  of  the  period,  the  Eng- 
lish had  also  to  contend  with  the  difficulty  which  Smith  and 
other  writers  had  pointed  out  must  occur  if  the  supplies  of 
the  money  metals  are  not  adequate  to  the  wants  of  a  grow- 
ing trade. 

Although  the  wealth  of  the  nation  had  increased  enor- 
mously and  the  annual  produce  of  its  labor  was  growing 
greater  year  by  year,  instead  of  the  greater  quantity  of  money 


68  PROTECTION   AND   PROGRESS 

metals  which  the  author  of  the  "Wealth  of  Nations"  said 
would  be  required  to  circulate  a  greater  quantity  of  com- 
modities* the  supply  was  daily  becoming  smaller.  Under 
the  circumstances  it  is  not  surprising  that  at  the  opening  of 
the  '40s  the  congested  state  of  afifairs  described  by  free 
trade  writers  should  have  existed  and  that  the  manufac- 
turers, who  were  confronted  with  a  constantly  declining  as 
well  as  contracting  market,  should  have  cast  about  for  a 
remedy  for  their  troubles. 

We  are  told  by  a  free  trade  author  who  has  sketched 
the  events  immediately  preceding  and  following  the  repeal 
of  the  corn  law^s  that  "the  business  depression  and  the 
poverty  of  the  people  were  potent  arguments  in  the  speeches 
of  the  leaders  of  the  anti-corn  law  league,  and  that  during 
the  winter  of  1842-43  the  league  and  its  literature  were 
everywhere,  and  men  who  could  not  read  were  compelled  to 
listen. "-j-  But  this  literature  may  be  searched  in  vain  for 
traces  of  the  theory  subsequently  advanced  that  restraint 
of  trade  had  a  tendency  to  repress  production. 

It  would  have  been  extraordinary  indeed  if  the  anti-corn 
law  agitators  had  told  their  hearers,  who  were  complaining 
of  overproduction,  that  the  efifect  of  protection  had  been  to 
repress  British  industry.  No  sucH  pretense  was  made.  On 
the  contrary,  the  fact  was  dwelt  upon  that  England  was  in 
a  position  which  gave  her  a  decided  advantage  over  the  rest 
of  the  world.  There  was  no  talk  of  removing  restraints  so 
that  Englishmen  might  expand  their  manufactures  ;  the  argu- 
ment was  entirely  directed  to  the  question  of  finding  relief 
for  an  overexpansion. 

The  situation  and  opinions  of  the  English  at  this  time 
are  accurately  sketched  by  McCulloch,  who  wrote  as  fol- 
lows :  "The  natural  capabilities  we  possess  for  carrying  on 
the  business  of  manufacturing  are,  all  things  considered, 


*Smith,  Wealth   of  Nations,   Book  I,   Chap.   XI. 
fTrumbull,  Free  Trade  Struggle  in  England,  p.   145. 


FREE  TRADE  IN  ENGLAND.  69 

decidedly  superior  to  those  of  any  other  people.  But  the 
superiority  to  which  we  have  already  arrived  is,  perhaps, 
the  greatest  advantage  in  our  favor.  Our  Western  manu- 
facturers, engineers  and  artisans,  are  more  intelligent,  skillful 
and  enterprising  than  those  of  any  other  country ;  and  the 
extraordinary  inventions  they  have  already  made,  and  their 
familiarity  with  all  the  principles  and  details  of  business, 
will  not  only  enable  them  to  perfect  the  processes  already  in 
use,  but  can  hardly  fail  to  lead  to  the  discovery  of  others. 
Our  establishments  for  spinning,  weaving,  printing,  bleach- 
ing, etc.,  are  infinitely  more  complete  and  perfect  than  any 
that  exist  elsewhere ;  the  division  of  labor  in  them  is  carried 
to  an  incomparably  greater  extent ;  the  workmen  are  trained 
from  infancy  to  industrious  habits  and  have  attained  that 
peculiar  dexterity  and  sleight  of  hand  in  the  performance  of 
their  separate  tasks  that  can  only  be  acquired  by  long  and  un- 
remitting application  to  the  same  employment.  Why,  then, 
having  all  these  advantages  on  our  side,  should  we  not  keep 
the  start  we  have  already  gained  ?  Every  other  people  that 
attempt  to  set  up  manufactures  must  obviously  labor  under 
the  greatest  difficulties  as  compared  with  us.  Their  estab- 
lishments cannot  at  first  be  sufficiently  large  to  enable  the 
division  of  employments  to  be  carried  to  any  considerable 
extent,  at  the  same  time  that  expertness  in  manipulation, 
and  in  the  details  of  the  various  processes,  can  only  be 
obtained  by  slow  degrees.  It  appears,  therefore,  remarkable 
to  conclude  that  such  new  beginners,  having  to  withstand 
the  competition  of  those  who  have  already  arrived  at  a  very 
high  degree  of  perfection  in  the  art,  must  be  immediately 
driven  out  of  every  market  equally  accessible  to  both  parties  ; 
and  that  nothing  but  the  aid  derived  from  restrictive  regula- 
tions and  prohibitions  will  be  effectual  to  prevent  the  total 
destruction  of  their  establishment  in  the  countries  where  they 
are  set  up."* 

*McCulloch,   Commercial    Dictionary,  p.  462. 


70  PROTECTION  AND   PROGRESS 

Every  line  of  this  excerpt  contradicts  the  assumption 
that  protection  was  a  hindrance  to  the  development  of  Eng- 
lisii  industry  and  testifies  to  the  fact  that  by  its  aid  Great 
Britain  had  built  up  a  system  of  manufactures  which  the 
most  competent  critics  of  the  time  claimed  was  superior  to 
that  of  any  other  nation.  It  shows  also  that  McCulloch,  who 
wrote  in  1847,  clearly  recognized  that  it  would  be  impossible 
for  a  nation  unprovided  with  a  thoroughly  developed  manu- 
facturing industry  to  compete  with  England  unless  the 
methods  resorted  to  by  that  country  were  imitated.  When 
he  asserted  that  only  by  restrictive  regulations  and  prohibi- 
tions could  a  country  without  manufacturing  establishments 
hope  to  escape  the  destructive  effects  of  British  competition, 
he  must  have  had  in  mind  the  fierce  struggles  of  England 
to  gain  a  foothold  among  the  commercial  nations  of  the 
world,  struggles  which  she  never  shrunk  from  in  the  pursuit 
of  her  purpose,  although  they  had  often  involved  her  in 
bloody  and  costly  wars. 

The  marvelous  feature  of  the  whole  discussion  is  that 
the  adherents  of  the  Manchester  school  have  vainly  imagined 
that  they  could  conceal  or  obscure  these  admissions  and  oblit- 
erate the  truth  of  history.  The  only  thing  that  saves  the 
attempt  from  ridicule  is  the  fact  that  it  nearly  succeeded.  It 
cannot  be  gainsaid  that  for  many  years  after  the  abrogation 
of  the  corn  laws  large  numbers  of  persons  living  in  other 
countries  believed,  or  affected  to  believe,  that  in  some  ways 
the  teachings  of  experience  would  be  refuted,  and  that  peo- 
ples without  manufacturing  systems  would  be  able,  in  the 
face  of  all  the  advantages  enjoyed  by  nations  with  established 
industries,  to  create  home  industries  for  themselves  without 
resorting  to  protection. 

There  were  some,  however,  who  insisted  upon  accepting 
as  sound  the  assumption  of  McCulloch  and  other  Cobdenites 
that  Great  Britain  possessed  an  overwhelming  advantage 
and  that  it  would  be  hopeless  to  contend  with  her  on  even 
terms.    These  reasoning  persons  proposed  to  disregard  the 


FREE  TRADE  IN  ENGLAND.  71 

allurements  of  present  cheapness,  and  by  making  temporary 
sacrifices  to  secure  for  their  own  countries  future  benefits. 
Their  arguments  in  favor  of  such  a  course  were  rational. 
They  pointed  out  that  the  toil  and  expense  which  attended 
the  creation  of  such  facilities  as  roads  were  often  heavy 
burdens,  but  that  those  who  bore  them  were  recompensed  by 
the  conveniences  provided  and  the  subsequent  lessening  of 
the  labor  involved  in  locomotion  and  in  moving  products 
from  one  point  to  another.  They  argued  that  only  the 
untutored  savage  insisted  upon  taking  from  natural  streams 
the  water  he  required  for  drinking  or  other  purposes,  and 
that  civilized  man  did  not  shrink  from  the  expenditure  of 
time  and  labor  necessary  to  dig  wells  or  construct  conduits 
to  bring  the  supplies  he  required  to  his  door  or  into  his  house. 

From  such  examples  they  drew  the  inference  that  a 
resort  to  art  means  progress,  and  boldly  planted  themselves 
upon  the  proposition  that  a  manufacturing  industry  would 
not  develop  itself  naturally  and  that  such  a  system  must  be 
artificially  produced.  If  obstacles  were  placed  in  the  way 
of  artificial  development  then  they  must  be  met  and  over- 
come. 

To  meet  such  arguments  the  Manchester  school  devoted 
itself  to  systematizing  the  free  trade  idea.  Many  of  the 
theories  made  familiar  through  its  instrumentality  after  1846 
were  unheard  of,  or,  at  least,  not  widely  exploited  in  England 
prior  to  that  date.  It  would  have  been  absurd  for  Cobden 
and  his  associates  to  tell  the  British  that  they  had  made  a 
mistake  in  resorting  to  artificial  means  to  promote  their 
manufacturing  industry,  or  that  the  resort  to  artificiality 
had  been  a  failure,  for  the  facts  would  have  promptly  refuted 
such  assertions. 

Every  Englishman  of  average  intelligence  knew  that  pro- 
tection had  been  in  vogue  in  England  for  centuries  and  that 
it  had  resulted  in  the  building  up  of  an  unrivaled  manufac- 
turing system  and  had  given  his  country  command  of  the 
seas.    There  was  very  little  discussion  of  abstractions ;  it  was 


^2  PROTECTION   AND   PROGRESS 

the  condition  that  confronted  them  to  which  Cobdenites 
devoted  their  attention.  They  recognized  that  under  the 
then  existing  circumstances  there  could  be  little  hope  of  a 
further  expansion  of  English  manufactures  unless  matters 
could  be  so  adjusted  that  Great  Britain  would  be  enabled 
to  produce  so  cheaply  that  the  nations  showing  a  disposition 
to  create  industries  of  their  own  would  be  discouraged  and 
perhaps  induced  to  believe  that  their  best  interests  would  be 
subserved  by  depending  upon  the  British  for  their  supplies 
of  manufactured  articles. 

Accordingly  all  of  the  resources  of  argument  were  di- 
rected to  convincing  Englishmen  that  they  would  incur  no 
sacrifice  by  abrogating  the  corn  laws.  The  drift  of  the 
discussion  is  plainly  seen  in  this  comment  on  the  attitude  of 
Sir  Robert  Peel  on  the  eve  of  abrogation.  Says  the  writer : 
"He  was  yielding  to  the  force  of  argument  and  more  en- 
larged experience.  He  had  closely  watched  the  operation 
of  protective  duties  during  the  past  four  or  five  years  and 
was  now  convinced  that  the  arguments  in  favor  of  their 
maintenance  were  no  longer  tenable.  He  was  convinced 
that  low  wages  were  not  the  result  of  low  prices  of  food. 
Sir  Robert  supported  this  last  statement  by  facts  that  could 
not  be  denied,  the  rate  of  wages  and  the  rate  of  prices  that 
had  preceded  during  the  past  six  years.  He  said  :  'For  three 
years  preceding  those  last  past,  prices  were  high,  while 
wages  were  low,  while  during  the  past  three  years  prices 
were  low  while  wages  were  high.'  This  was  a  very  uncom- 
fortable statement  for  those  political  economists  who  had 
been  trading  on  the  fallacy  that  the  protective  tarifif  was  nec- 
essary in  order  to  secure  high  wages  for  the  workingmen, 
and  that  cheap  bread  and  meat  and  clothes  meant  low 
wages.  * 

It  requires  considerable  audacity  to  assert  that  the  so- 
called  fallacy  of  assuming  that  wages  are  governed  in  part 


*Trumbull,  Free  Trade  Struggle  in  England,  p.  225. 


FREE  TRADE  IN  ENGLAND.  yi 

by  the  cost  of  subsistence  was  advanced  by  protectionists, 
but  this  is  a  quaHty  which  is  never  found  lacking  in  adherents 
of  the  Manchester  school.  We  need  but  turn  to  the  pages  of 
Smith  to  discover  that  he  carefully  developed  this  idea, 
which  is  frequently  denounced  as  an  economic  heresy  by 
Cobdenites,  Smith  tells  us  plainly  that  "as  the  wages  of 
labor  are  everywhere  regulated  partly  by  the  demand  for  it 
and  partly  by  the  average  price  of  the  necessary  articles  of 
subsistence,  whatever  raises  this  average  price  must  neces- 
sarily raise  those  wages,  so  that  the  laborer  may  still  be  able 
to  purchase  that  quantity  of  these  necessary  articles  which 
the  state  of  the  demand  for  labor,  whether  increasing,  sta- 
tionary or  declining,  requires  that  he  should  have."* 

If  the  wages  of  labor  and  subsistence  were  believed  to 
be  intimately  associated  by  the  economists  of  the  period 
immediately  preceding  the  corn  law  agitation  the  belief  will 
explain  the  attitude  of  the  British  manufacturers.  It  had 
been  pointed  out  to  them  by  various  writers,  and  their  own 
observations  confirmed  what  they  were  told,  that  the  effect 
of  the  expansion  of  the  world's  commerce  and  the  increase 
of  wealth  was  to  raise  wages.  Smith  had  noted  the  tend- 
ency, saying:  "Since  the  time  of  Henry  VIII  the  wealth 
and  revenue  of  the  country  have  been  continually  advancing, 
and  in  the  course  of  their  progress  their  pace  seems  rather 
to  have  been  gradually  accelerated  than  retarded.  They  seem 
not  only  to  have  been  going  on,  but  to  have  been  going  on 
faster  and  faster.  The  wages  of  labor  have  been  continually 
increasing  during  the  same  period."  f 

This  phenomenon,  noted  toward  the  end  of  the  eighteenth 
century,  manifested  itself  in  a  more  decided  manner  after 
the  opening  of  the  nineteenth  century.  We  know  from  the 
evidence  of  Green,  Cunningham  and  others  that  there  was 
a  period  of  expansion  which  resulted  in  the  overproduction 

*Smith,  Wealth  of  Nations,  Book  V,  Chap.  II. 
flbid,  Book  I,  Chap.  IX. 


74  PROTECTION   AND   PROGRESS 

already  referred  to,  concurrently  with  which  there  was  a 
great  increase  of  wealth.  In  this  increase  the  English 
worker  participated.  Wages  continued  to  improve  during 
the  nineteenth  century,  and  the  condition  of  the  workingmen 
of  England  was  decidedly  better  forty  years  after  its  opening 
than  at  the  time  when  Smith  wrote. 

Then  came  the  period  of  sharp  contraction,  due  undoubt- 
edly to  the  diminution  of  the  supply  of  precious  metals. 
The  first  to  feel  the  effects  were  the  manufacturers,  who 
found  the  demand  for  their  products  shrinking,  or,  what 
amounts  to  the  same  thing,  they  discovered  the  inability  of 
the  world  to  keep  abreast  of  their  facilities  for  production. 
They  began  to  cast  about  for  remedies,  and  naturally  devoted 
their  attention  to  the  question  of  wages.  They  soon  discov- 
ered that  the  obstacles  to  peremptory  reductions  were  almost 
insuperable,  for  while  the  law  which  Smith  had  observed 
undoubtedly  operates,  it  is  slow  in  its  operation,  for  what 
advances  the  workingman  has  gained  through  progress  he 
never  surrenders  except  under  the  compulsion  of  necessity. 

It  was  to  hasten  this  consummation  that  the  British  man- 
ufacturers forced  the  issue  of  a  cheap  loaf.  They  under- 
stood perfectly  that  it  would  be  impossible  for  them  to 
maintain  their  position  unless  they  could  secure  cheap  food 
in  abundance  for  their  operators  and  free  raw  materials 
for  their  machinery  to  operate  upon.  It  is  probable  that 
they  believed  that  throwing  down  the  barriers  of  protection 
would  involve  no  sacrifice,  for,  as  we  have  already  shown, 
the  impression  was  general  in  England  that  British  agricul- 
ture was  firmly  entrenched  against  foreign  rivalry,  and 
many  were  convinced  that  the  further  development  of  the 
manufacturing  industry  which  the  free  trade  policy  contem- 
plated would  so  enlarge  the  home  market  that  the  farmer 
would  enjoy  better  prices  than  he  did  under  the  protective 
system. 

But  it  is  evident  that  many  of  those  who  were  strongly 
imbued  with  the  idea  of  British  manufacturing  superiority 


FREE  TRADE  IN  ENGLAND.  75 

were  willing  to  see  the  industry  in  which  they  were  specially 
interested  prosper  at  the  expense  of  agriculture.  The  germs 
of  some  of  the  theories  which  were  so  carefully  elaborated 
later  had  already  begun  to  develop,  and  the  idea  of  making 
a  vast  workshop  of  England,  which  subsequently  took  hold 
of  the  popular  imagination  and  greatly  impressed  observers 
in  other  countries,  sometimes  found  expression  in  the  corn 
law  debates.  Those  who  gave  voice  to  it  cautiously  sug- 
gested that  the  injury  to  the  farmer  would  be  more  than 
compensated  by  the  benefits  to  the  growing  urban  popula- 
tions. From  this  we  may  infer  that  the  addresses  to  the 
workingmen  in  the  towns  and  the  farmers  in  the  country 
lacked  congruousness,  but  the  orators  relied  upon  the  fact 
that  the  two  classes  of  audiences  they  were  called  upon  to 
address  were  not  in  close  contact,  and  they  also  perceived 
that  the  extremity  in  which  the  people  found  themselves, 
owing  to  the  depression,  had  destroyed  the  sense  of  discrim- 
ination and  inclined  them  to  regard  any  change  as  a  remedy. 
It  is  commonly  assumed  that  the  free  trade  policy  devel- 
oped itself  logically  in  England,  but  it  requires  no  wide 
acquaintance  with  the  history  of  the  movement  to  perceive 
that  the  legislative  success  of  the  manufacturers  was  achieved 
by  the  aid  of  adventitious  circumstances.  Green  tells  us 
that  although  Robert  Peel  entered  office  pledged  to  protec- 
tion measures,  his  own  mind  was  slowly  veering  around  to 
a  conviction  of  their  inexpediency,  but  he  destroys  the  force 
of  this  comment  by  saying  that  "in  1846  the  failure  of  the 
potato  crop  in  Ireland  and  of  the  harvest  in  England  forced 
Peel  to  introduce  a  bill  for  the  repeal  of  the  corn  laws."* 
Another  writer,  with  better  claims  to  economic  authority 
than  Green,  tells  us  that  protection  owed  its  overthrow  to 
the  potato  famine.f  and  this  view  is  now  generally  accepted 
by  most  investigators.    This  does  not  imply  that  commenta- 

*Green,  History  of  English  People,  Vol.  IV,  p.  1843. 

f  Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  163. 


76  PROTECTION  AND  PROGRESS 

tors  had  any  doubts  that  the  idea  would  have  been  adopted 
if  the  circumstances  had  been  different ;  they  merely  recog- 
nize that  a  combination  of  disasters  assisted  the  manufac- 
turers and  enabled  them  to  carry  through  a  measure  of  vital 
importance  to  them,  even  if  it  did  threaten  the,  at  the  time, 
leading  industry  of  the  country. 

It  requires  but  little  reflection  to  direct  the  attention  to 
contingencies  which  might  have  completely  changed  the 
current  of  English  thought.  Had  the  concurrent  failure 
of  the  potato  crop  and  the  harvest  in  England  not  occurred 
the  struggle  over  protection  might  have  been  protracted 
until  the  influence  of  the  gold  discoveries  in  California  and 
Australia  had  begun  to  make  themselves  felt. 

Had  matters  so  turned  out  it  is  not  unreasonable  to  sup- 
pose that  attention  would  have  been  diverted  from  the 
subject  by  the  substitution  of  business  activity  for  the  exist- 
ing depression.  In  that  event  the  progress  made  in  every 
branch  of  industry  and  the  subsequent  rapid  acquisition  of 
wealth  by  the  British,  which  has  been  attributed  by  the  Cob- 
denites  to  the  operations  of  free  trade,  would  have  been 
assigned  to  some  other  cause.  Perhaps  the  true  reason  for 
the  expansion  would  have  been  comprehended,  and  the 
future  trouble  which  England  must  experience  from  the 
adoption  of  an  erroneous,  because  it  is  an  unnatural,  eco- 
nomic system  might  have  been  averted. 

Had  gold  been  discovered  a  few  years  earlier  in  Califor- 
nia and  Australia  the  whole  course  of  history  would  have 
been  changed.  In  that  event  there  would  have  been  no 
Cobdenism.  The  story  the  future  historian  will  have  to 
tell  in  consequence  will  be  vastly  different  from  what  it 
might  have  been  had  the  supply  of  the  precious  metals  been 
abundant  during  the  first  half  of  the  century.  Because  of 
their  scarcity  during  this  period  history  will  exhibit  the 
British  in  the  light  of  a  people  grasping  at  universal  domin- 
ion and  seeking  to  obtain  it  by  the  expenditure  of  pounds, 
shillings  and  pence.     It  will  also  show  that  the  blundering 


FREE  TRADE  IN  ENGLAND.  ^j 

misconceptions  of  English  economists  were  responsible  for 
the  illusory  hope,  which  was  almost  wholly  based  on  the 
groundless  belief  that  British  skill  and  ingenuity  would 
always  insure  the  supremacy  of  the  nation  in  thcv  fields  of 
industry,  that  England  would  become  and  remain  the  mis- 
tress of  the  world. 


CHAPTER  IV. 

FOUNDATION  OF  ENGLISH  SUPREMACY. 

GREAT    BRITAIN    READY    TO    TAKE    ADVANTAGE    OF    THE    GOLD 
DISCOVERIES. 

England's  manufacturing  industry  in  1841 — Able  to  supply  the 
needs  of  the  world — British  commerce  before  the  repeal  of  the 
corn  laws — Rival  nations  have  developed  manufactures  at  a 
greater  rate  than  the  United  Kingdom — Great  Britain's  relative 
position  as  a  manufacturer  of  textiles  not  so  good  as  formerly 
— Once  supreme  as  a  producer  of  iron,  Great  Britain  now  holds 
second  rank — Agriculture  progressive  before  the  repeal  of  the 
corn  laws,  retrogressive  since  that  event — The  increase  of 
wealth  as  rapid  before  the  free  trade  era  as  it  has  been  since — 
Population  increased  more  rapidly  prior  to  1846  than  after- 
ward— Great  Britain  gained  the  lion's  share  of  the  advantages 
resulting  from  the  gold  discoveries — Assumption  that  British 
workers  were  more  skilled  than  those  of  other  countries — Be- 
ginning of  England's  career  as  a  great  creditor  nation — Improve- 
ment of  British  trade  not  due  to  repeal  of  corn  laws — Heavy 
declines  of  exports  during  1847  and  1848 — Improvement  sets  in 
when  fresh  supplies  of  the  metals  are  given  to  the  world — 
Great  profits  made  by  the  British  before  other  nations  became 
competitors — Inability  of  British  writers  to  comprehend  the 
true  cause  of  the  rapid  development  of  the  United  Kingdom. 

Before  proceeding  to  the  examination  of  the  blunders 
made  by  the  Manchester  school,  to  which  reference  was 
made  in  the  preceding  chapter,  it  is  advisable  to  produce 
the  evidence  which  will  effectually  corroborate  the  assump- 
tion of  McCulloch  and  others  that  at  the  time  of  the  abolition 
of  the  corn  laws  England  was  in  a  better  position  commer- 
cially than  any  other  nation,  and  that  the  idea  entertained 

by  this  school  of  thinkers  that  if  other  countries  would 

78 


ENGLISH  SUPREMACY  79 

consent  to  the  project  of  making  Great  Britain  the  workshop 
of  the  world  the  English  might  permanently  maintain  their 
industrial  supremacy  was  not  entirely  visionary. 

This  proof  will  be  largely  statistical  in  character,  and  it 
will  be  so  presented  that  it  will  be  impossible  to  avoid  draw- 
ing the  inference  that  the  Cobdenites  have  grossly  exagger- 
ated the  importance  of  the  commercial  growth  of  England 
since  1846  in  order  to  carry  the  impression  that  the  protective 
system  in  vogue  prior  to  that  date  had  greatly  restricted 
industry  in  that  country  and  that  expansion  would  have 
been  impossible  if  the  views  of  Cobden  and  his  followers  had 
not  prevailed. 

In  order  that  no  question  may  arise  respecting  the  authen- 
ticity of  the  figures  quoted,  the  latest  publication  of  Michael 
Mulhall  has  been  relied  upon,  because  it  is  regarded  as 
authoritative  in  England."*  Turning  to  its  pages,  we  find 
that  the  occupation  of  the  inhabitants  of  the  United  Kingdom 
in  the  year  1841  was  as  follows:  In  agriculture  there  were 
employed  3,401,000  persons;  in  manufacturing,  3,137,000; 
in  trade,  684,000 ;  in  the  professions,  223,000,  and  as  domes- 
tics, 1,556,000.  According  to  these  figures  there  were  9,001,- 
000  British  employed  in  gainful  occupations  in  the  year 
named  in  a  population  of  26,855,000.  The  ratio  of  those 
employed  in  manufacturing  industries  was  34.8  of  the  total 
engaged  in  gainful  occupations,  as  against  37.8  in  agri- 
culture. 

It  is  apparent  from  this  presentation  that  as  early  as 
1841  the  development  of  British  manufacturing  was  abnor- 
mal. The  industry  had  long  ceased  to  merely  suffice  for 
the  requirements  of  the  British  people,  and  its  further 
expansion  at  that  time  was  dependent  on  the  growth  of  pop- 
ulation and  the  ability  to  sell  to  other  peoples. 

In  1 841  British  exports  were  valued  at  i6  4s  per  capita. 
They  consisted  chiefly  of  manufactured  articles,  which  were 
carried  in  British  ships  to  all  parts  of  the  world.    No  country 

♦Mulhall,   Industries  and  Wealth  of  Nations,   1896   Ed. 


8o  PROTECTION   AND   PROGRESS 

at  this  time  approached  England's  vohime  of  trade.  Her 
proportion  of  the  commerce  of  the  globe  was  as  great  in 
that  year  as  it  has  ever  been  since.  In  1840  the  total  exter- 
nal trade,  exports  and  imports,  of  all  nations  was  estimated 
at  £574,000,000.  Of  this  amount  £114,000,000,  almost  one- 
fifth,  was  credited  to  Great  Britain.  In  1894  the  world's 
foreign  trade  was  figured  at  £3,305,000,000  and  England's 
share  of  it  at  £682,000,000,  a  trifle  more  than  one-fifth  of 
the  whole. 

If  no  other  facts  could  be  cited  to  support  the  contention 
that  the  development  of  British  trade  subsequent  to  the 
repeal  of  the  corn  laws  was  not  .owing  to  that  particular 
change  of  fiscal  policy,  these  figures  would  be  sufficient  to 
discredit  the  claim  of  the  Cobdenites  that  England's  present 
commercial  position  is  due  to  free  trade.  To  establish  their 
position  the  adherents  of  the  Manchester  school  should  be 
able  to  show  that  other  nations  which  refused  to  adopt  the 
English  economic  policy  had  been  unsuccessful  in  expanding 
foreign  trade,  but  they  cannot  do  so.  The  tables  of  exports 
and  imports  demonstrate  conclusively  that  protectionist 
countries  have  advanced  more  rapidly  since  1850  than  Great 
Britain. 

It  has  always  seemed  to  the  writer  that  the  tendency  of 
the  free  trader  to  attach  an  undue  importance  to  foreign 
trade  has  resulted  in  clouding  his  judgment  and  rendering 
him  unable  to  discern  the  true  causes  of  certain  economic 
phenomena.  There  is  no  doubt  that  the  proclivity  referred 
to  has  made  him  incapable  of  perceiving  that  the  adverse 
balance  which  British  exports  and  imports  has  shown  for  a 
long  period  is  not  due  to  the  workings  of  the  economic  sys- 
tem resorted  to  by  Great  Britain,  but  is  chiefly,  if  not  wholly, 
the  result  of  British  investments  in  other  countries ;  and  that 
ultimately  what  is  now  looked  upon  as  an  indication  of 
prosperity  will  be  recognized  as  a  menace  to  the  welfare 
of  the  producing  masses  of  England.  In  another  place  this 
view  will  be  more  thoroughly  developed ;  reference  is  made 


ENGLISH  SUPREMACY  8i 

to  it  here  merely  to  call  attention  to  the  significant  circum- 
stance that  while  Great  Britain  has  thus  far  maintained  an 
important  position  as  a  trading  nation  she  has  lost  ground 
as  a  producer. 

In  1840  Mulhall  estimates  that  the  value  of  the  output  of 
the  world's  manufactories  was  £i,8io^ooo,0(X).  Great  Brit- 
ain's share  of  this  amount  was  £246,000,000,  or  a  little  more 
than  one-seventh  of  the  whole.  In  1894  the  world's  output 
had  increased  to  £5,676,000,000,  but  Great  Britain's  propor- 
tion was  considerably  less  than  one-seventh,  her  production 
being  valued  at  £826,000,000. 

But  a  better  insight  into  the  changes  wrought  during  this 
period  may  be  gained  by  examining  the  relative  conditions  of 
the  industries  in  which  Great  Britain  was  once  assumed  to  be 
supreme.  Take  the  case  of  textile  fabrics.  In  1840  the  value 
of  textile  fibers  consumed  in  the  United  Kingdom  was 
£92,000,000,  or  nearly  one-third  of  the  world's  product, 
which  was  estimated  at  £246,000,000.  In  1894  England's 
consumption  of  textile  fibers  was  considerably  less  than  one- 
fourth,  her  share  being  £191,000,000  of  the  world's  total  of 
£826,000,000.  In  1840  England  was  credited  with  more  than 
one-half  of  the  world's  product  of  iron ;  in  1894  her  propor- 
tion was  less  than  one-fourth.  In  the  first  named  year  the 
value  of  the  hardware  manufactured  by  the  United  Kingdom, 
under  which  term  are  included  all  goods  in  which  iron,  steel, 
copper  or  other  metals  are  the  chief  components,  was 
£30,000,000,  the  whole  world  being  credited  with  a  produc- 
tion valued  at  £90,000,000.  Fifty-four  years  later  the 
product  of  the  world  was  valued  at  £603,000,000  and  the 
share  of  the  United  Kingdom  at  £142,000,000.  In  1840  Eng- 
land's proportion  of  the  whole  hardware  product  was  one- 
third  ;  in  1894  it  was  less  than  one-fifth. 

Turning  to  the  figures  of  mineral  production,  we  find 

that  as  early  as  1830  the  output  of  British  coal  was  16,100,000 

tons,  and  that  twenty  years  later  it  was  49,000,000  tons. 

This  shows  a  degree  of  progress  which  has  not  been  sur- 

e 


S2  rM^OTFXTION    AND    PROGRESS 

passed  since  1850,  the  figures  of  production  in  1895  iK-ing 
189,000,000  tons,  less  than  a  fourfold  increase  during  a 
period  of  forty-five  years,  whereas  during  the  twenty  years 
preceding  1850  the  increase  was  over  threefold. 

The  statistics  tell  a  similar  story  of  the  production  of 
other  minerals.  In  1830  the  British  output  of  minerals 
other  than  coal  was  1,980,000  tons;  this  quantity  had  in- 
creased to  5,800,000  tons  in  1850,  or  almost  threefold; 
between  1850  and  1870  the  increase  of  the  output  was  less 
than  threefold,  and  during  the  twenty-five  years  between 
1870  and  1895  there  was  a  diminution  in  the  rate  of  pro- 
duction. 

Between  1827  and  1846  British  agriculture  was  progres- 
sive. In  the  first  mentioned  year  there  were  19,140,000 
acres  under  crops ;  in  the  year  of  the  repeal  of  the  corn  laws 
this  acreage  had  increased  to  21,930,000.  Between  1840  and 
1895  there  was  a  decline  to  20,050,000  acres  under  grain. 

This  rapid  glance  at  the  condition  of  industry  in  Great 
Britain  prior  to  the  repeal  of  the  corn  laws  may  be  con- 
cluded with  the  statement  that  British  wealth  increased 
as  rapidly  during  the  years  anterior  to  1846  as  subsequently. 
The  tables  furnished  by  Mr.  Mulhall  do  not  permit  us  to 
give  the  statistics  for  the  periods  with  the  exactness  that 
might  be  desired,  but  he  shows  that  between  1812  and  1836 
the  wealth  of  the  United  Kingdom  increased  from  £404.- 
000,000  to  £600,000,000,  and  that  between  1836  and  1870  the 
increase  was  to  £938,000,000.  It  is  noteworthy  in  this  con- 
nection that  the  population  increased  from  18,500,000  in 
1 81 2  to  25,000,000  in  1836,  and  that  twenty-four  years 
later,  in  i860,  it  Avas  only  29,000,000.  The  addition  during 
twenty-four  years  of  protection  was  6,500.000;  during  the 
latter  twenty-four  years,  fourteen  of  which  fell  within  the 
free  trade  period,  it  was  only  4.000,000. 

These  statistics  show  conclusively  that  no  matter  what 
may  have  been  the  condition  of  Great  Britain  during  the 
years   of  the   corn   law   agitation    it  cannot   be   truthfully 


ENGLISH  SUPREMACY  83 

alleged  that  protection  had  prior  to  that  time  acted  as  a 
restriction  on  production  or  trade  in  the  United  Kingdom. 
Indicating,  as  these  figures  do,  that  there  was  as  rapid  a 
degree  of  progress  in  every  industry  before  the  change  of 
policy  as  that  attained  in  later  years,  it  is  manifestly  absurd 
to  claim  that  Great  Britain  has  flourished  because  she 
changed  her  tariff.  There  is  no  evidence  whatever  to  sup- 
port such  a  theory ;  on  the  contrary,  the  facts  point  to  an 
entirely  different  cause  of  the  expansion  of  the  commerce 
and  trade  of  the  United  Kingdom,  an  expansion  which 
she  experienced  in  common  with  the  rest  of  the  world. 

If  the  period  between  1850  and  1895  is  taken  as  a  whole 
it  will  be  seen  that  the  relative  position  of  Great  Britain 
did  not  improve,  but  there  is  no  doubt  that  in  the  years 
immediately  following  the  gold  discoveries  in  California 
and  Australia  the  British  secured  the  lion's  share  of  the 
advantages.  Why  Great  Britain  was  able  to  do  so  is  dis- 
closed by  a  more  detailed  examination  of  the  statistics  already 
drawn  upon  so  freely.  These  show  that  there  was  no  nation 
in  the  running  with  Great  Britain  at  the  close  of  the  '40s. 

In  1840  the  international  or  foreign  trade  of  Great  Brit- 
tain  was  nearly  double  that  of  France,  more  than  double 
that  of  Germany  and  twice  and  a  half  as  great  as  that  of 
the  United  States.  At  that  time  the  balance  of  trade  was 
in  favor  of  the  British,  the  exports  exceeding  imports  very 
largely.  It  is  useless  to  give  the  official  figures  in  this  con- 
nection, for  they  are  extremely  misleading,  creating  the 
impression  of  a  stagnant  trade,  because  they  take  no  note 
of  the  continuous  decline  in  values  of  produce  between  the 
opening  of  the  century  and  the  year  1850,  but,  erroneous 
as  they  are,  they  show  a  constant  expansion  of  exports, 
especially  of  manufactured  articles. 

When  we  begin  to  institute  comparisons  we  soon  light 
upon  the  reason  for  this  steady  increase.  It  was  solely 
due  to  the  artificially  acquired  superiority  of  the  British, 
and  not  to  any  natural  advantages  enjoyed  by  them  over 


84  PROTECTION   AND   PROGRESS 

competitors,  as  has  been  persistently  assumed  by  free  trade 
writers. 

In  1840  the  British  produced  1,390,000  tons  of  iron,  or 
more  than  one-half  of  the  world's  product  in  that  year, 
which  was  reckoned  at  2,680,000  tons.  The  ten  years  fol- 
lowing witnessed  an  increase  of  British  product  to  1,970,000 
tons  without  a  corresponding  increase  in  the  output  of  other 
nations.  The  false  inference  drawn  from  English  expan- 
sion and  the  relative  backwardness  of  other  countries  in 
this  industry  was  that  the  skill  of  the  workers  and  the 
quality  and  extent  of  the  deposits  of  the  mineral  in  the 
United  Kingdom  were  such  that  it  possessed  a  decided 
advantage  over  all  competitors. 

Perhaps  such  deductions  were  reasonable  at  the  time,  for 
the  disparity  in  production  seemed  to  indicate  the  posses- 
sion by  the  British  of  advantages  not  enjoyed  by  their 
rivals.  In  1840,  while  Great  Britain  was  producing  1,390,- 
000  tons  of  pig  iron,  the  United  States  could  only  show 
an  output  of  290,000  and  Germany  of  170,000  tons.  In 
1850  the  conditions  remained  substantially  the  same;  con- 
sequently it  was  not  surprising  that  English  writers  and 
politicians  should  have  made  the  blunder  of  assuming  when 
this  country  began  increasing  its  demands  for  British  iron 
and  steel,  and  articles  manufactured  therefrom,  that  we  had 
found  out  that  we  could  supply  ourselves  more  cheaply  by 
resorting  to  England,  and  that  we  would  always  continue 
to  depend  upon  that  country  for  such  goods.  The  free 
trade  literature  of  the  years  between  1850  and  1875  is  filled 
with  assumptions  of  this  kind;  since  the  latter  date  the 
idea  has  been  abandoned. 

It  was  not  only  in  the  iron  industry  that  Great  Britain  en- 
joyed pre-eminence  at  the  time  of  the  repeal  of  the  corn 
laws.  In  1840  she  had  distanced  all  competitors  in  the 
manufacture  of  textile  fabrics.  Mulhall  has  made  a  cal- 
culation of  the  value  of  the  fibers  consumed  by  the  nations 
of  the  world  in  that  year  and  states  that  it  aggregated 


ENGLISH  SUPREMACY  85 

i246,000,000,  on  the  basis  of  £170  per  ton.  The  consump- 
tion of  the  United  Kingdom  was  £92,000,000,  while  that  of 
France  was  £52,000,000,  Germany  and  the  United  States 
being  credited  with  £22,000,000  and  £15,000,000  respectively. 

These  figures  scarcely  reveal  the  full  extent  of  the  lead 
of  Great  Britain.  That  can  only  be  appreciated  by  keeping 
in  mind  that  the  United  Kingdom  had  for  many  years  been 
an  exporter  of  textiles,  while  her  most  important  rivals 
were  unable  to  supply  their  home  demands.  This  was  par- 
ticularly the  case  in  the  United  States,  where,  as  we  have 
seen,  the  iron  and  steel  and  the  textile  industries  were  at  a 
low  stage  during  the  whole  of  the  decade  preceding  the 
gold  discoveries.  And  what  is  stated  of  the  particular  in- 
dustries mentioned  was  equally  true  of  every  other  indus- 
try in  the  United  States  at  the  time. 

From  this  presentation  the  reader  will  readily  compre- 
hend that  when  the  injection  of  large  quantities  of  the  pre- 
cious metals  into  the  stagnant  waters  of  business  began 
to  stir  them  and  set  the  waves  of  prosperity  in  motion,  Great 
Britain  was  in  a  position  to  take  advantage  of  the  changed 
circumstances.  Her  factories,  which  had  for  years  been 
producing  in  excess  of  the  needs  of  Englishmen  and  of 
the  ability  of  foreigners  to  buy,  were  suddenly  relieved  of 
their  surplus  stocks,  which  were  exchanged  for  the  virgin 
gold  of  California  and  Australia. 

The  supplies  of  the  precious  metals  thus  obtained  not 
only  revivified  the  home  trade  of  England ;  they  were  em- 
ployed with  equal  effectiveness  in  promoting  that  roundabout 
trade  with  foreign  countries  which  Adam  Smith  so  fre- 
quently dwelt  upon.  During  the  years  following  the  gold 
discoveries  England  largely  increased  her  investments  in 
the  United  States  and  other  countries,  and  thus  made  possi- 
ble the  apparent  anomaly  subsequently  witnessed  of  a  peo- 
ple being  able  to  buy  hundreds  of  millions  more  annually 
than  they  sell  and  to  remain  prosperous  during  the  process. 


86  PROTECTION   AND   PROGRESS 

That  the  era  of  prosperity  enjoyed  by  England  subse- 
quent to  1849  should  have  been  attributed  by  later  writers 
to  the  operations  of  free  trade  is  somewhat  remarkable 
when  all  the  facts  are  considered.  That  the  repeal  of  the 
corn  laws  failed  to  benefit  trade  is  shown  by  the  tables  of 
exports  of  manufactured  articles.  In  1844  the  value  of 
woolen  and  worsted  manufactures  exported  by  Great  Bri- 
tain was,  according  to  a  computation  from  the  sessional 
papers  of  the  British  Parliament,  $45,815,265.  In  1843 
they  declined  to  $43,800,215;  in  1846  a  still  further  decline 
to  $36,216,865  was  noted.  In  the  following  year  they  in- 
creased to  $39,487,010,  but  in  1848  they  had  dropped  back 
to  $32,554,015.*  In  1849  s"  increase  of  over  ten  million 
dollars  is  noted,  and  in  1850  the  exports  of  woolens  and 
worsteds  from  the  United  Kingdom  were  over  eighteen 
millions  more  than  they  were  two  years  after  the  repeal 
of  the  corn  laws,  when,  if  the  theories  of  the  Cobdenites 
had  not  miscarried,  the  good  effects  of  a  cheap  loaf  should 
have  already  made  themselves  felt. 

The  story  of  the  exports  of  British  linen  products  does 
not  differ.  In  1845  the  declared  value  of  the  exports  of 
this  class  of  manufactured  articles  was  $20,484,684;  in 
1848  the  amount  exported  had  dwindled  to  $16,481,190. 
After  1849  there  was  a  rapid  increase,  the  exportations 
in  1850  reaching  $24,143,465,  and  in  1856  they  were  nearly 
twice  as  large  as  in  1848.  The  record  of  silk  exports  is 
the  same,  the  year  1848  presenting  a  sharp  line  of  demar- 
cation, the  dwindling  shipments  of  the  previous  years  chang- 
ing to  steadily  increasing  exports  of  silken  fabrics.  But 
the  most  striking  evidence  is  that  furnished  by  the  tables 
showing  the  value  of  the  exports  of  the  British  metal  manu- 
factures. In  1846  these  had  attained  a  value  of  $50,968,895  ; 
in   1848  they  had  fallen  to  $48,797,845.     In   1849  they  in- 

*Bigelovv,  Sessional  Paper  British  Parliament,  pp.  96-100. 


ENGLISH  SUPREMACY  87 

creased  to  $55,772,520,  and  in  1853  they  were  double    those 
of  the  year  1848,  being  valued  at  $104,025,775.* 

There  is  no  trace  of  the  effect  of  the  "cheap  loaf"  in 
these  surprising  advances,  for  the  price  lists  of  the  time 
show  that  the  cost  of  bread  did  not  decline  after  the  repeal 
of  the  corn  laws.  "The  market  prices  of  wheat  as  given  in 
the  abstracts,  and  the  contract  prices  of  the  four-pound  loaf 
supplied  to  the  Seaman's  Hospital  at  Greenwich,  England, 
averaged  between  1841  and  1850  50  shillings  3  pence  per 
quarter  for  wheat  and  6:]-  pence  for  the  four-pound  loaf; 
between  185 1  and  i860  wheat  averaged  54  shillings  7 
pence  and  the  four-pound  loaf  7  pence. "f  As  man  does 
not  live  by  bread  alone  it  is  well  to  note  also  that  the  prices 
of  other  farm  produce  advanced  greatly  after  1850,  and 
that  at  the  height  of  English  manufacturing  prosperity  meat 
of  all  kinds  and  dairy  products  were  much  dearer  than 
during  the  years  while  the  corn  law  agitation  was  in  prog- 
ress. 

Obviously,  then,  it  is  an  error  to  attribute  to  the  repeal 
of  the  corn  laws  the  great  strides  made  by  the  British  dur- 
ing the  '50s  and  later.  The  evidence  shows  distinctly 
that  the  workmen  in  the  cities  were  not  benefited  in  the 
manner  expected,  for  they  had  to  pay  more  for  their  bread 
and  meat  than  formerly,  but  fortunately  for  them  they  were 
enabled  to  meet  the  increased  demands  upon  their  purses 
because  they  had  plenty  of  work. 

When  we  inquire  into  the  reason  for  this  remarkable 
change  information  is  elicited  which  suggests  the  idea  that 
while  the  wealth  of  Great  Britain  was  enormously  increased 
during  this  period  of  expansion  British  workingmen  were 
discounting  their  future.  We  are  told  by  a  competent  ob- 
server that  "no  nation,  not  even  the  American,  ever  made 
such  progress  or  accumulated  such   wealth   upon  products 

*Bigelow,   Sessional   Paper  British   Parliament,  pp.  96-100. 
fWilliamson,   Blackwood's   Mazagine,    1887. 


88  PROTECTION   AND   PROGRESS 

manufactured  as  Britain  did  in  this  stage  of  her  history. 
The  prospectus  of  the  Barrow  Steel  Company  stated  that 
profits  had  been  30  and  40  per  cent,  per  annum,  and  in  one 
year  they  had  reached  the  incredible  rate  of  60  per  cent, 
upon  the  entire  capital."*  The  writer  says  this  was  "only 
a  straw  showing  the  unheard  of  returns  made  by  the  manu- 
facturers of  Britain  when  the  world  was  at  its  feet  and 
before  strenuous  competition  had  reduced  and  in  many 
cases  banished  profits." 

There  is  no  necessity  for  adding  to  this  evidence,  it  is 
so  amply  corroborated  by  the  statistics  showing  the  enor- 
mous increase  of  British  wealth  during  the  years  while 
the  manufacturers  of  that  country  were  supreme ;  it  would 
be  a  work  of  supererogation  to  go  into  details,  although 
in  another  chapter  the  subject  will  be  reopened  to  demon- 
strate that  when  Britain  was  to  all  intents  and  purposes 
the  workshop  of  the  world  she  plainly  showed  that  she 
was  disposed  to  use  her  superiority  with  harshness  and 
that  she  was  always  ready  to  exact  the  last  farthing  from 
those  dependent  upon  her  for  supplies  of  manufactured 
goods,  a  propensity  which  went  far  to  destroy  the  force 
of  the  argument  of  the  Manchester  school  that  mankind  gen- 
erally would  profit  by  the  successful  establishment  of  the 
system  its  adherents  advocated. 

Here  we  need  only  note  that  while  these  tremendous 
profits  were  being  wrung  from  the  people  whose  industries 
were  in  a  backward  or  entirely  undeveloped  state  the  manu- 
facturers and  others  who  shared  with  them  were  invest- 
ing their  surplus  wealth  in  the  new  countries,  and  were  thus 
laying  the  foundation  for  the  future  undoing  of  their  nation. 
It  was  during  the  thirty  years  following  the  repeal  of  the 
corn  laws  that  the  greatest  part  of  the  many  billions  which 
the  British  now  own  in  the  shape  of  foreign  securities  was 


♦Carnegie,   The   Manchester   School   and  To-day,   Nineteenth   Cen- 
tury,  February,    1898. 


ENGLISH  SUPREMACY  89 

earned,  and  the  dividends  or  earnings  on  these  investments 
are  now  beginning  to  be  paid,  not  in  raw  and  food  prod- 
ucts as  the  Cobdenites  hoped  they  always  would  be,  but  in 
finished  articles,  which  are  slowly  but  surely  displacing 
the  productions  of  British  workingmen  and  increasing  the 
army  of  paupers  and  unemployed  in  the  United  Kingdom. 

At  some  future  time  economists  will  clearly  perceive  the 
special  application  to  Great  Britain  of  many  of  the  theories 
framed  by  them  to  fit  the  imaginary  results  of  a  protective 
policy.  When  they  study  with  the  attention  it  deserves 
the  period  under  review  in  this  chapter  they  will  recognize 
that  the  inevitable  tendency  of  the  policy  advocated  by  the 
Cobdenites  was  to  over-people  the  British  Isles.  It  was  im- 
possible that  any  other  result  could  have  ensued. 

Instead  of  permitting  the  dispersion  of  mankind  over 
the  whole  face  of  the  earth  and  the  multiplication  of  civili- 
zations, the  Cobdenites  proposed  to  concentrate  all  the  en- 
lightenment and  wealth  of  the  world  in  the  narrow  precincts 
of  two  or  three  insignificant  islands.  While  they  glibly 
discussed  the  laws  of  nature  their  minds  were  impervious 
to  the  fact  that  it  is  more  natural  for  peoples  to  establish 
themselves  at  the  bases  of  supplies  of  food  and  raw  prod- 
ucts than  to  transport  the  latter  to  distant  points  to  be 
manufactured  and  then  to  be  returned  to  the  original  pro- 
ducers. But  their  most  serious  blunder  was  in  assuming 
that  the  industrial  superiority  which  the  British  had  un- 
doubtedly reached  was  due  to  natural  causes,  when,  in  fact, 
it  was  owing  solely  to  a  process  of  integration  which  could 
not  have  taken  place  except  under  the  stimulus  of  artificiality. 

One  of  the  melancholy  features  of  the  Cobdenistic  prop- 
aganda is  the  glamour  it  threw  over  the  minds  of  cultured 
Englishmen.  Some  day  it  will  be  seen  that  much  of  the 
teaching  of  England's  foremost  philosophers  has  been  viti- 
ated by  a  too  ready  acceptance  of  statements  made  by  ii^ter-j 
ested  persons  and  the  disposition  to  elevate  a  priori  methods 
above  the  plain  evidence  of  facts. 


90  PROTECTION   AND   PROGRESS 

In  the  following  chapter  this  phase  of  the  subject  will 
be  discussed  and  testimony  will  be  adduced  to  show  how 
profoundly  eminent  Englishmen  deceived  themselves  regard- 
ing the  capacity  of  their  own  countrymen  and  the  capabilities 
of  foreigners.  If  the  writer  succeeds  in  his  aim  he  will  con- 
clusively demonstrate  tliat  the  vagaries  into  which  Spencer 
and  a  host  of  other  writers  were  led  in  discussing  the  ques- 
tion of  the  efficiency  of  labor  were  wholly  due  to  their  appar- 
ent inability  to  recognize  the  true  cause  of  the  rapid  progress 
of  the  United  Kingdom  after  the  abolition  of  the  corn  laws. 


CHAPTER  V. 
"ENGLAND  THE  WORLD'S  WORKSHOP." 

THE  THEORY   OF    NATURAL   DEVELOPMENT   AND   THE    RESULTS 
OF   INTERDEPENDENCE. 

Independent  evolution  advocated  by  free  traders — Effects  of  con- 
centration of  capital — An  artificial  advantage  mistaken  for  a 
natural  one — Why  Cobdenites  believed  that  England  could  be 
made  the  world's  workshop — British  resort  to  artificial  methods 
to  crush  out  the  rivalry  of  the  United  States — The  assumption 
that  attention  to  manufactures  meant  a  diversion  of  capital 
from  more  profitable  pursuits  not  accepted  by  early  Americans — 
The  question  of  labor  efficiency — German  progress  under  the 
protective  system — The  encouragement  of  infant  industries  a 
a  necessity — The  producers  of  rude  products  make  slow  ad- 
vances toward  a  complex  civilization  and  its  attendant  benefits — 
Agricultural  retrogression  after  the  overthrow  of  the  Roman 
empire — The  approach  toward  heterogenity  must  proceed  at  a 
snail-like  pace  in  countries  where  the  development  of  resources 
is  one-sided — The  principle  of  subdivision  of  labor  may  be 
carried  too  far — The  effect  of  the  adoption  of  a  protective 
policy  is  to  advance  the  cause  of  civilization. 

In  one  of  his  latest  works  Herbert  Spencer  is  pleased  to 
severely  arraign  those  who  refuse  to  accept  without  quali- 
fication his  theory  of  natural  development.  He  says  that 
''blind  to  the  significance  of  the  innumerable  facts  surround- 
ing them,  multitudes  of  men  assert  the  need  for  the  'organ- 
ization of  labor.'  Actually  they  suppose  that  at  present 
labor  is  unorganized.  All  these  marvelous  specializations 
and  these  endlessly  ramifying  connections  which  have  age 
by  age  grown  up  since  the  time  when  the  members  of  sav- 
age tribes  carried  on  each  for  himself  the  same  occupations 

91 


92  PROTECTION   AND   PROGRESS 

are  non-existent  for  them ;  or  if  they  recognize  a  few  of 
them,  they  do  not  perceive  that  these  form  an  infinitesimal 
illustration  of  the  whole.  A  fly  seated  on  the  surface  of 
the  body  has  about  as  good  a  conception  of  its  internal 
structure  as  one  of  these  schemers  has  of  the  social  organ- 
ization in  which  he  is  imbedded."* 

The  reader  who  accepts  without  cavil  all  the  assumptions 
of  the  evolutionists  may  acquiesce  in  a  sweeping  generaliza- 
tion such  as  that  contained  in  the  above  quotation.  He  may 
recognize  that  as  the  ages  have  rolled  on  results  have  been 
produced  which  resemble  organization.  Men  have  changed 
their  attitude  of  habitual  antagonism  for  one  which  out- 
wardly has  the  appearance  of  friendliness  and  a  disposition  to 
co-operate,  but  it  would  be  difficult  to  establish  that  the 
change  has  come  naturally  and  has  not  been  assisted  by 
the  conscious  eflforts  of  those  interested  in  bringing  it  about. 
On  the  contrary,  the  evidence  is  overwhelming  that  legisla- 
tion, the  constant  object  of  the  animadversions  of  Spencer, 
has  modified  and  altered  and  arrested  natural  development 
to  such  a  degree  that  except  in  the  broadest  sense  it  is  im- 
possible to  accept  the  theory  of  a  natural  social  evolution. 

Mr.  Spencer,  who  lays  such  stress  on  the  operations  of 
natural  integration,  asks  us  in  another  place  to  note  these 
important  facts:  "See,  then,"  he  says,  "how  great  has  be- 
come the  interdependence.  Different  kinds  of  production 
aid  one  another.  Distribution,  while  depending  for  its  roads 
and  vehicles  on  various  kinds  of  production,  makes  produc- 
tion more  abundant  and  varied ;  while  a  developed  and 
differential  currency  furthers  production  and  raises  the  rate 
of  distribution.  Thus,  by  their  mutual  influences,  the  struc- 
tures carrying  on  these  processes  become  more  and  more 
integrated.  *'t 

Following  this  description  of  a  highly  developed  social 


♦Spencer,  Principles  of  Sociology,  II — III,  p.  411. 
fTbid,  p.  405. 


'THE  WORLD'S  WORKSHOP"  93 

organism  is  a  review  of  some  of  the  special  manifestations  of 
integration.  "First  among  these  may  be  set  down  the  co- 
operation of  separate  processes  and  appHances  in  wider  and 
more  varied  ways.  Some  man  observing  how  a  housemaid 
trundhng  a  mop  dispersed  the  vv-ater  saw  that  by  the  aid 
of  centrifugal  force  various  things  might  be  dried  and  others 
separated.  Among  results  of  his  thought  here  are  some. 
Masses  of  wet  sugar  placed  in  a  rotating  drum  with  a  per- 
forated periphery  are  thus  freed  from  the  adherent  syrup 
and  left  dry.  Wet  clothes  put  into  such  a  drum  are  made 
by  its  rotation  to  part  with  nearly  all  their  water  and  come 
out  merely  damp.  And  now,  by  the  same  method,  the  more 
liquid  part  of  milk  is  separated  from  the  less  liquid  part — 
the  cream."* 

These  and  numerous  other  instances  of  the  effect  of  inter- 
dependence cited  by  the  author  are  relied  upon  by  protec- 
tionists to  support  their  contention  that  progress  is  not  in- 
dependent of  but  is  owing  to  the  conscious  efforts  of  men 
to  better  their  condition.  The  teachings  of  experience  all 
negative  the  idea  that  mankind  would  be  benefited  by  com- 
pelling each  nation  to  work  out  its  industrial  salvation  by  a 
process  of  independent  evolution.  Protectionists  have  always 
clearly  recognized  that  the  earlier  stages  of  progress  are 
painfully  slow  and  that  it  would  be  folly  for  a  people  to  pass 
through  them  if  any  means  presented  itself  of  reaching  the 
goal  of  a  higher  stage  of  development  by  easier  and  quicker 
methods. 

Borrowing  the  illustration  of  Spencer,  they  say  that  a 
people  with  intelligence  enough  to  appreciate  and  use  cen- 
trifugal machinery  for  the  manufacture  of  sugar  would  be 
foolish  to  neglect  to  avail  themselves  of  its  benefits.  They 
do  not  believe  that  it  would  be  the  part  of  wisdom  to  evolve 
a  system  of  their  own,  a  course  which  would  require  centu- 
ries, but  urge  that  the  true  method  for  the  people  of  a  nation 

*Spencer,  Principles  of  Sociology. 


94  PROTECTION  AND  PROGRESS 

is  to  begin  at  the  point  reached  by  others  and  apply  their 
ingenuity  to  still  further  perfecting  the  instrumentalities 
already  in  use. 

It  is  obvious,  however,  that  a  people  without  capital,  no 
matter  how  great  their  natural  resources  might  be,  would 
find  it  impossible,  or  at  least  very  slow  and  laborious  work, 
to  develop  them  in  competition  with  peoples  who  had  reached 
the  stage  where  the  use  of  perfected  machinery  was  common. 

Let  it  be  assumed  for  purposes  of  illustration  that  a  coun- 
try abounding  in  cane  had  by  a  process  of  evolution  devel- 
oped a  system  of  centrifugal  manufacture  which  reduced 
the  cost  of  the  production  of  sugar  to  so  low  a  figure  that 
it  would  be  impossible  for  countries  with  ruder  appliances 
to  compete.  In  such  case,  no  matter  how  bountiful  nature 
might  be,  the  artificial  advantage  enjoyed  by  the  country 
with  the  capital  necessary  to  maintain  the  developed  ma- 
chinery would  retain  its  lead  permanently  and  deter  the 
opening  of  new  fields  of  sugar  supply.  The  result  would 
be  dearer  sugar  to  the  consumer  than  if  the  area  of  pro- 
duction had  been  enlarged,  for  experience  teaches  that  con- 
centration of  capital  within  limited  areas  always  tends  to 
the  creation  of  monopolies  which  are  as  harmful  in  their 
operation  as  those  granted  by  the  kings  and  governments 
of  other  days. 

The  Cobdenites  appear  to  have  overlooked  the  benefits  to 
be  derived  from  the  opening  of  fresh  fields  of  competition, 
and  their  failure  to  do  so  is  responsible  for  the  blunder 
made  by  them  in  assuming  that  the  United  Kingdom  could 
be  made  the  permanent  workshop  of  the  world.  Having 
before  their  eyes  the  results  of  the  high  industrial  develop- 
ment of  their  own  country,  they  deliberately  banished  from 
their  minds  the  memory  of  the  methods  by  which  it  was 
brought  about,  and  made  themselves  believe  that  Great 
Britain  was  especially  fitted  by  nature  for  the  work  of  con- 
verting the  rude  products  of  the  earth  into  finished  articles. 
This  finally  led  to  the  assumption  that  the  resources  of  Brit- 


"THE  WORLD'S  WORKSHOP"  95 

ain  in  the  matter  of  coal  and  iron  were  greater  than  those 
of  any  other  country  and  to  the  still  more  erroneous  belief 
that  the  British  were  superior  in  skill  and  intelligence  to 
all  other  peoples. 

When  we  turn  to  the  early  literary  productions  of  the 
Manchester  school  for  corroboration  of  this  assertion  we 
find  remarkable  statements  designed  to  show  the  efficiency 
of  English  labor.  Had  such  utterances  been  confined  to  the 
pages  of  Cobdenite  political  economists  pure  and  simple  it 
might  be  assumed  that  they  were  merely  a  part  of  the  propa- 
ganda which  had  for  its  object  the  promotion  of  the  national 
wealth  of  Great  Britain,  but  when  we  find  authors  of  the 
standing  of  Spencer  asserting  without  reservation  that  their 
countrymen  surpassed  all  others  in  those  qualifications  which 
go  to  make  up  a  great  industrial  people,  we  recognize  that 
the  error  was  not  one  confined  to  the  vulgar,  but  that  it  was 
shared  by  all  classes  of  Britons. 

The  existence  of  this  belief  was  no  doubt  responsible  for 
the  evolution  of  the  theory  which  subsequently  became  the 
corner-stone  of  Cobdenism,  namely,  that  "each  country  has 
some  natural  or  acquired  capabilities  which  enable  it  to 
carry  on  certain  branches  of  industry  more  advantageously 
than  anyone  else."  These  words  were  quoted  by  Spencer 
from  McCulloch,  who  used  them  to  illustrate  the  idea  that 
Great  Britain  and  other  colonizing  countries  followed  a 
mistaken  course  in  compelling  their  dependencies  to  trade 
exclusively  with  the  mother  country,  because,  as  he  asserted, 
it  resulted  in  "engaging  a  portion  of  the  capital  and  labor 
of  the  country  in  a  less  advantageous  channel  than  that  one 
into  which  it  would  naturally  have  flowed."  Spencer  ac- 
cepted the  conclusion  of  McCulloch,  and  added:  "If  to  the 
injury  we  do  ourselves  by  manufacturing  goods  which  we 
could  more  economically  buy  is  added  the  injury  we  suffer 
in  pacifying  the  colonists  by  purchasing  from  them  commod- 
ities obtainable  on  better  terms  elsewhere,  we  have  before 


96  PROTECTION   AND   PROGRESS 

us  the  twofold  loss  which  these  much  coveted  monopolies 
entail."* 

If  we  follow  the  development  of  the  theory  here  outlined 
we  shall  see  that  the  Cobdenites  elaborated  it  so  that  later 
it  was  interpreted  to  mean  that  the  capabilities  of  all  countries 
were  well  defined  in  the  middle  of  the  nineteenth  century 
and  that  a  people  who  at  that  time,  or  later,  resorted  to 
artificial  methods  to  accelerate  the  development  of  an  indus- 
try were  disregarding  natural  laws,  and  therefore  must 
ultimately  fai' 

Andrew  Carnegie,  in  discussing  this  subject,  quotes  a 
passage  from  an  author  of  the  Manchester  school  which 
illustrates  the  Cobden  view  out  of  which  so  many  fallacies 
subsequently  grew.  This  writer  said  :  "Nature  has  decreed, 
and  wisely  so,  that  all  nations  of  the  earth  shall  be  inter- 
dependent, each  with  a  mission.  To  one  is  given  fertile  soil, 
to  another  rich  mines,  to  a  third  great  forests ;  to  one  sun- 
shine and  heat,  to  another  a  temperate  zone  and  to  another 
colder  clime ;  one  nation  shall  perform  this  service,  another 
that,  and  a  third  shall  do  something  else ;  all  co-operating, 
each  furnishing  its  natural  product,  forming  one  grand  har- 
monious whole. "t 

There  was  no  excuse  for  such  an  assumption  at  the  time 
this  was  written,  for  it  was  as  well  known  then  as  now  that 
no  such  sharp  distinction  in  the  capabilities  of  countries  ex- 
isted. The  resources  of  rivals  were  as  well  understood  by 
observant  men  prior  to  1850  as  they  are  to-day.  When 
McCulloch  enumerated  the  advantages  enjoyed  by  Great 
Britain,  in  the  passage  quoted  in  another  chapter,  wherein 
he  attributed  British  manufacturing  superiority  to  long  ex- 
perience, accumulated  capital  and  preparedness,  he  did  not 
pretend  that  nature  was  on  the  side  of  his  countrymen.    He 


♦Spencer,   Social   Statics,  p.   193- 

fCarnegie,   The   Manchester   School   and  To-day,  Nineteenth   Cen- 
tury,   February,    1898. 


"THE  WORLD'S  WORKSHOP"  97 

clearly  recognized  the  artificial  character  of  the  advantages 
of  Great  Britain,  and  his  argument  was  solely  directed  to 
the  consideration  of  the  question  of  preventing  other  people 
securing  similar  advantages. 

In  the  same  fashion  did  Lord  Brougham  argue  thirty-five 
years  earlier  when  he  urged  the  policy  of  flooding  the  Amer- 
ican markets  with  wares  made  by  Britons.  There  is  no  hint 
in  Lord  Brougham's  utterances  that  he  thought  this  country 
was  deficient  in  natural  resources  or  that  its  people  lacked 
the  capacity  to  develop  them.  On  the  contrary,  he  acknowl- 
edged what  free  traders  subsequently  endeavored  to  conceal, 
namely,  that  America  gave  great  promise  of  becoming  a 
manufacturing  country,  and  for  that  reason  was  to  be 
dreaded.  He  said :  "It  is  well  worth  while  to  incur  loss 
upon  the  first  exportation  in  order  by  the  glut  to  stifle  in 
the  cradle  those  rising  manufacturers  in  the  United  States 
which  the  war  had  forced  into  existence  contrary  to  the 
natural  course  of  things." 

The  phrase  "natural  course  of  things"  employed  by 
Brougham  was  not  used  by  him  to  express  the  idea  that  the 
United  States  was  unfitted  by  nature  to  engage  in  manufac- 
tures ;  what  he  meant  to  imply  was  that  this  country  had 
been  permitted  during  the  period  of  the  Napoleonic  wars  to 
develop  its  industries  in  a  fashion  which  he  assumed  would 
have  been  impossible  if  the  British  had  not  had  their  atten- 
tion engaged  elsewhere.  His  suggested  remedy,  and  his 
accompanying  statement  of  the  fact  that  immense  quantities 
of  manufactured  goods  were  shipped  to  the  United  States 
with  the  distinct  purpose  of  so  reducing  prices  that  the 
Americans  would  be  discouraged,  show  his  clear  conception 
of  the  fact  that  whatever  advantage  Great  Britain  enjoyed 
at  that  time  was  purely  artificial  and  that  in  his  judgment 
it  was  essential  to  the  continuance  of  British  prosperity  to 
prevent  this  country  creating  for  itself  similar  advantages 
by  a  resort  to  art. 

The  curious  doctrine  that  there  is  a  natural  division  of 
7 


98  PROTECTION   AND   PROGRESS 

the  countries  of  the  world  into  producers  of  rude  and  fin- 
ished products  did  not  emerge  until  the  whirl  of  business 
prosperity  began  to  confuse  the  minds  of  English  scholars. 
Not  until  then  did  they  discover  that  some  peoples  were 
adapted  to  the  production  of  rude  products  and  that  others 
were  fitted  by  nature  to  fashion  them  into  finished  articles. 
It  was  not  until  the  United  States  and  Australia  began 
pouring  into  England  their  gold  in  exchange  for  manufac- 
tured products  that  the  Cobdenites  took  up  the  idea.  Then, 
impressed  by  the  magnitude  of  British  industrial  operations, 
they  fancied  they  saw  in  their  rapid  expansion  manifesta- 
tions of  a  provident  nature. 

It  was  about  this  time  that  the  Manchester  school  began 
to  assert  "that  to  our  beloved  land,  Great  Britain,  has  been 
assigned  the  high  mission  of  manufacturing  for  her  sister 
nations.  Our  kin  beyond  the  sea  shall  send  to  us  in  our  ships  . 
their  cotton  from  the  Mississippi  valley ;  India  shall  con- 
tribute its  jute ;  Russia  its  hemp  and  its  flax ;  Australia  its 
finer  wools ;  and  we,  with  our  supplies  of  coal  and  ironstone 
for  our  factories  and  workshops,  our  skilled  mechanics  and 
artificers,  and  our  vast  capital,  shall  invent  and  construct  the 
necessary  machinery,  and  weave  these  materials  into  fine 
cloth  for  the  nations ;  all  shall  be  fashioned  by  us  and  made 
fit  for  the  use  of  men.  Our  ships  which  reach  us  laden  with 
raw  materials  shall  return  to  all  parts  of  the  earth  laden 
with  these  our  higher  products  made  from  the  crude.  The 
exchange  of  raw  for  finished  products  under  the  decrees 
of  nature  makes  each  nation  the  servant  of  the  other  and 
proclaims  the  brotherhood  of  man.  Peace  and  good  will 
shall  reign  upon  the  earth;  one  nation  after  another  must 
follow  our  example,  and  free  exchange  of  commodities  shall 
everywhere  prevail.  Their  ports  shall  open  wide  for  the 
reception  of  our  finished  products,  as  ours  are  open  for  their 
raw  materials."* 

*Carnegie,  The   Manchester   School  and  To-Day,   Nineteenth   Cen- 
tury,   February,    1898. 


"THE  WORLD'S  WORKSHOP"  99 

It  is  surprising  that  those  wiio  developed  this  extraordi- 
nary idea  should  have  ignored  the  remarkable  results 
achieved  by  Great  Britain  by  pursuing  a  course  which  indi- 
cated that  fortune  attended  only  those  peoples  who  diversi- 
fied their  industries,  or  that  they  should  have  chosen  to 
disregard  the  experience  of  the  United  States,  which  demon- 
strated conclusively  that  no  nation  could  increase  in  wealth 
and  importance  by  devoting  itself  solely  to  agriculture,  no 
matter  how  naturally  adapted  the  country  seemed  to  such  a 
pursuit.  But  above  all  things  it  is  amazing  that  writers 
who  professed  to  regard  Adam  Smith  as  their  teacher  and 
guide  should  have  believed  it  possible  for  practical  men  to 
read  his  book  without  profiting  by  the  hints  and  warnings 
contained  in  its  pages. 

The  American  colonists  were  familiar  with  Smith's 
"Wealth  of  Nations,"  and  it  is  quite  evident  that  it  made  a 
profound  impression  upon  them.  There  is  abundant  evi- 
dence in  the  economic  writings  and  acts  of  the  founders  of 
the  United  States  that  they  regarded  the  commercial  success 
achieved  by  England  as  due  to  the  practice  of  a  policy  such 
as  that  outlined  by  the  Scotch  economist  in  the  passages  in 
which  he  describes  the  result  of  a  manufacturing  country 
exchanging  "a  small  part  of  its  manufactured  produce"  for 
"a  great  part  of  the  rude  produce  of  other  countries."  And 
they  were  equally  convinced  that  "a.  country  without  trade 
and  manufactures  is  generally  obliged  to  purchase  at  the 
expense  of  a  great  part  of  its  rude  produce  a  very  small  part 
of  the  manufactured  produce  of  other  countries."* 

The  writers  of  history  usually  manage  to  obscure  the 
motives  of  those  who  inspire  great  movements,  and  in  the 
case  of  the  American  revolution  they  achieved  more  than 
the  ordinary  degree  of  success.  The  opinion  commonly  held 
that  the  struggle  was  merely  over  a  question  of  taxation  is 
not  tenable.    The  underlying  cause  of  colonial  discontent  was 


♦Smith,  Wealth  of  Nations,  Book  IV,  Chap.  IX. 


100        PROTECTION  AND  PROGRESS 

the  perception  of  the  fact  that  the  colonies  were  being  ex- 
ploited for  the  benefit  of  the  mother  country,  and  that  in 
pursuance  of  this  purpose  every  possible  obstacle  was  placed 
in  the  way  of  the  development  of  a  domestic  manufacturing 
industry. 

All  of  the  reflecting  colonists  accepted  without  cavil 
Smith's  assertion  that  the  growth  of  towns  is  beneficial  to 
an  agricultural  people.  The  argument  that  the  proximity 
of  city  and  town  is  highly  advantageous  to  farmers  appealed 
to  the  latter  with  great  force.*  On  this  account  they  were 
eager  to  have  manufactures  established  in  their  midst.  They 
were  anxious  to  give  a  practical  application  to  Smith's  state- 
ment that  "the  corn  which  grows  within  a  mile  of  the  town 
sells  there  for  the  same  price  with  that  which  comes  from 
twenty  miles'  distance." 

The  rational  view  that  workship  and  farm  could  profitably 
be  brought  together,  to  which  Smith  gave  so  much  promi- 
nence, was  the  one  which  had  the  most  attraction  for  the 
agricultural  class.  They  were  thoroughly  convinced  that  the 
price  of  their  products  would  "be  increased  by  what  had 
usually  been  the  expense  of  transporting  them  to  distant 
countries,"  ;|;  if  they  brought  farm  and  factory  together,  and 
they  were  not  deterred  by  Smith's  contradictory  assertions 
regarding  the  scarcity  of  capital,  and  his  deprecation  of  any 
other  than  a  natural  development,  from  attempts  to  arti- 
ficially stimulate  manufactures. 

Being  sensible  men,  the  colonists  regarded  with  distrust 
Smith's  assurance  that  "perfect  freedom  of  trade  would  be 
the  most  eflFectual  expedient  for  supplying  them,  in  due 
time,  with  all  the  artificers,  manufacturers  and  merchants 
whom  they  wanted  at  home,  and  for  filling  up  in  the  proper- 
est  and  most  advantageous  manner  that  very  important  void 

♦Smith,  Wealth  of  Nations,  Book  III,  Chap.  I. 

flbid. 

^:Ibid,  Book  I,  Chap.  XI. 


"THE  WORLD'S  WORKSHOP'  loi 

which  they  felt."*  They  attached  the  same  importance  to 
the  promise  that  reasoning  persons  do  to  those  passages  in 
Holy  Writ  in  which  the  faithful  are  assured  that  prayer  will 
be  rewarded  by  material  benefits.  The  colonists  were  willing 
to  believe  that  all  the  things  promised  might  be  secured 
some  day,  but  they  asked  themselves  when  that  day  would 
arrive.  "Due  time"  was  too  vague  a  date  to  suit  them,  be- 
cause they  felt  that  it  might  not  arrive  for  centuries,  and 
some  even  believed  it  would  never  come. 

The  colonists,  and  afterwards  the  revolters,  had  no  con- 
fidence in  Smith's  assumption  that  "no  regulation  of  com- 
merce can  increase  the  quantity  of  industry  in  any  society 
beyond  what  its  capital  can  maintain. "f  Xn  rejecting  the 
theory  they  showed  a  nice  discrimination,  because  they 
found  in  another  part  of  his  work  distinct  assurances  that 
it  was  not  necessary  for  each  society  to  create  its  own  cap- 
ital. He  had  told  them  elsewhere  that  "the  mercantile  capital 
of  Holland  is  so  great  that  it  is  continually  overflowing, 
sometimes  into  the  funds  of  foreign  countries,  sometimes 
into  loans  to  private  traders  and  adventurers  of  foreign 
countries,"  and  that  "the  capital  of  Holland  necessarily 
flows  towards  the  most  distant  employments."!  But  they 
scarcely  required  the  information,  for  even  at  this  early  day 
Dutch  money  was  seeking  profit  by  promoting  manufacturing 
on  this  side  of  the  Atlantic. 

Despite  the  testimony  of  Smith  and  the  experience  of  this 
and  other  countries,  the  theory  that  in  order  to  successfully 
build  up  a  manufacturing  industry  the  people  of  a  new 
country  must  precede  such  attempts  by  accumulating  a 
domestic  capital  still  prevails.  The  Cobdenites,  in  the  face 
of  a  plethora  which  has  forced  interest  rates  to  a  minimum 
and  which  is  responsible  for  colossal  swindling  speculative 
undertakings,  still  insist  that  attempts  to  create  a  manu- 

*Smith,  Wealth  of  Nations,  Book  IV,  Chap.  IX. 
flbid.  Book  IV,  Chap.  I. 
flbid.  Book  IV,  Chap.  VII. 


W,.  :  -.H^Ori-CI^ION  -AND   PROGRESS 

facturing  industry  in  a  country  like  the  United  States  is  bad 
economy  because  it  diverts  capital  from  more  profitable  pur- 
suits. 

Even  in  the  time  of  Smith  there  was  no  foundation  for 
the  assumption  that  the  promotion  of  manufacturing  enter- 
prises in  the  colonies  would  have  been  at  the  expense  of 
agriculture.  The  latter  industry  never  lacked  capital ;  on 
the  contrary,  its  striking  peculiarity  was  the  rapidity  of  its 
expansion  and  consequent  injury  to  the  producer,  who  suf- 
fered from  the  results  of  overproduction.  This  feature 
has  been  the  dominating  one  in  American  agriculture  since 
colonial  days.  In  the  vernacular,  "farming  has  always  been 
overdone  in  the  United  States."  Therefore  the  industry 
could  not  have  suffered  from  having  capital  diverted  from 
it.  On  the  contrary,  those  engaged  in  the  pursuit  of  agri- 
culture must  have  been  benefited  rather  than  injured  by  the 
introduction  of  a  manufacturing  industry,  no  matter  from 
whence  the  capital  for  its  creation  was  derived. 

This  extended  reference  to  the  experience  of  the  United 
States  may  appear  to  the  reader  to  be  a  digression  from  the 
discussion  of  the  question  whether  nature  designed  some 
countries  to  be  producers  of  raw  and  food  products  while 
it  set  aside  others  for  the  profitable  occupation  of  converting 
raw  materials  into  finished  products,  but  the  illustration  was 
required  to  expose  the  fallacy  of  the  Cobdenistic  theory 
under  review,  which  was  more  directly  applied  to  this  than 
any  other  country. 

Those  who  have  failed  to  follow  the  wanderings  of  free 
trade  theorizers  may  hesitate  to  accept  the  quotation  here 
commented  upon  as  indicative  of  the  real  opinion  of  the 
Manchester  school  of  economists.  Its  effusiveness  may  raise 
the  suspicion  that  it  was  a  sentimental  view  rather  than  a 
practical  discussion  of  the  matter  in  question.  But  the 
reader  may  easily  be  assured  that  it  accurately  represents 
the  opinion  entertained  by  a  vast  number  of  sober,  reflecting 
Britons.     Skepticism  on  this  point  will  be  removed  by  a 


"THE  WORLD'S  WORKSHOP"  103 

resort  to  the  pages  of  Spencer's  voluminous  works,  which  are 
filled  with  proof  that  the  belief  was  almost  universal  in  Eng- 
land that  that  country  was  fitted  by  nature  to  be  the  world's 
workshop. 

In  developing  his  extreme  views  of  individualism  Spencer 
furnished  illustrations  and  drew  inferences  from  them  which 
clearly  establish  that  he  was  as  much  the  victim  of  this  par- 
ticular hallucination  as  the  most  extreme  adherent  of  the 
Manchester  school.  By  unequivocally  endorsing  McCul- 
loch's  assertion  that  "each  country  has  some  acquired  or 
natural  capabilities  that  enable  it  to  carry  on  certain  branches 
of  industry  more  advantageously  than  any  one  else,"  Spencer 
committed  himself  to  the  theory  that  some  time  about  the 
middle  of  the  nineteenth  century  the  conditions  of  industry 
had  become  fixed.  And  when  he  advised  his  fellow  country- 
men that  they  would  injure  themselves  by  refusing  to  buy 
manufactured  goods  from  foreigners  when  they  could  do 
so  economically,  he  virtually  assumed  that  it  would  be  un- 
wise to  attempt  to  meet  the  conditions  that  the  superior 
skill  or  greater  experience  of  a  rival  people  had  created.  In 
short,  Mr.  Spencer's  attitude  on  this  subject  is  that  of  a 
man  who  believes  that  present  gain  is  of  more  consequence 
than  improvement.* 

This  is  a  singular  line  of  reasoning  for  an  evolutionist  to 
have  followed,  discrediting,  as  it  does,  the  main  postulate 
of  the  philosophy  that  man  is  constantly  improving.  If  a 
nation  has  acquired  capabilities  by  which  its  people  are  en- 
abled to  manufacture  certain  articles  more  cheaply  than  the 
people  of  any  other  nation,  obviously  because  the  latter  are 
deficient  in  those  capabilities,  then  Mr.  Spencer  urges  that 
it  would  be  folly  for  the  present  incapables  to  refuse  to  buy 
cheaper  articles.  This  is  tantamount  to  advising  the  aban- 
donment of  all  effort  on  the  part  of  deficient  peoples.  No 
matter  what  latent  abilities  they  may  have,  no  attempt  must 
be  made  to  develop  them,  because,  forsooth,  a  portion  of  them 

*Spencer,  Social  Statics,  Pps.  216 — 218. 


104        PROTECTION   AND   PROGRESS 

would"  temporarily  suffer  by  being  deprived  of  the  oppor- 
tunity to  buy  commodities  on  better  terms  elsewhere. 

Such  a  conclusion  could  only  be  reached  by  a  man  whose 
devotion  to  an  idea  had  become  a  mania.  A  less  gifted  per- 
son would  have  easily  recognized  that  had  such  a  theory 
prevailed  several  centuries  ago  the  boasted  progress  of  the 
British  would  not  have  been  matter  for  contemporary  histor- 
ians   to  record, 

Mr.  Spencer's  views  regarding  the  efficacy  of  individual 
effort  have  caused  him  to  miss  the  significance  of  many  of 
the  facts  he  has  recorded  and  to  confuse  results  proceeding 
from  different  causes.  In  the  case  here  instanced  he  has 
virtually  assumed  that  the  cheapness  due  to  natural  advan- 
tages and  that  resulting  from  acquired  abilities  do  not  differ, 
and  that  it  would  be  vain  for  the  people  of  an  undeveloped 
country  to  attempt  to  fit  themselves  to  contend  against  rivals 
who  had  gained  skill  by  practice  and  experience. 

No  reasonable  person,  however,  will  insist  that  natural 
advantages  and  acquired  capabilities  can  be  properly  coupled 
in  this  fashion.  It  is  easy  to  comprehend  that  all  things  else 
being  equal  a  people  with  superior  natural  advantages  must 
prevail  over  competitors  not  so  well  favored,  but  it  is  im- 
possible to  conceive  of  a  people  with  superior  natural  ad- 
vantages, and  the  capacity  and  disposition  to  develop  them, 
lagging  in  the  industrial  race  unless  some  artificial  obstacle 
is  imposed. 

That  such  obstacles  have  constantly  been  interposed  to 
prevent  the  advancement  of  undeveloped  peoples  we  know. 
History  abounds  with  illustrations  of  the  fact  and  some 
of  them  have  been  adduced  by  Mr.  Spencer,  but  he  has  with 
a  singular  pertinacity  chosen  to  regard  every  acquired  ad- 
vantage as  a  natural  one  and  has  assumed  that  every  deficien- 
cy or  backwardness  in  undeveloped  peoples,  brought  about  by 
the  aggressiveness  of  nations  in  an  advanced  stage  of  indus- 
trial development,  is  due  solely  to  natural  causes. 

That  this  assertion  does  not  misstate  Mr.  Spencer's  views 


"THE  WORLD'S  WORKSHOP"  105 

the  following  extract  from  a  discussion  of  the  subject  of 
"Sanitary  Supervision"  will  show.  The  quotation  will  also 
exhibit  the  grossly  erroneous  estimate  of  the  capacity  of 
foreigners  made  by  Mr.  Spencer,  as  well  as  the  defects  in  his 
extreme  views  of  laissea  faire.  After  arguing  at  some  length 
that  even  precautions  against  disease  may  be  more  safely 
left  by  society  to  individual  effort  than  to  governments  act- 
ing in  a  co-operative  capacity,  he  says : 

"Should  proof  of  this  be  asked,  it  may  be  found  in  the 
contrast  between  English  energy  and  continental  helpless- 
ness. English  engineers  established  the  first  gas  works  in 
Paris,  after  the  failure  of  a  French  company ;  and  many  of 
the  gas  works  throughout  Europe  have  been  constructed  by 
Englishmen.  An  English  engineer  introduced  steam  navi- 
gation on  the  Rhone ;  another  English  engineer  succeeded  in 
ascending  the  Danube  by  steam,  after  the  French  and  Ger- 
mans had  failed.  The  first  steamboats  on  the  Loire  were 
built  by  Englishmen ;  the  great  suspension  bridge  at  Pesth 
has  been  built  by  an  Englishman ;  and  an  Englishman  is 
now  building  a  still  greater  suspension  bridge  across  the 
Dnieper.  Many  continental  railways  have  had  Englishmen 
as  consulting  engineers ;  and  in  spite  of  the  celebrated  min- 
ing college  at  Freyburg,  several  of  the  mineral  fields  along 
the  Rhine  have  been  opened  up  by  English  capital  employing 
English  skill. 

"Now,  why  is  this?  Why  were  our  coaches  so  superior 
to  the  diligences  and  cihvagen  of  our  neighbors  ?  Why  did 
our  railway  system  develop  so  much  faster?  Why  are  our 
towns  better  drained,  better  paved  and  better  supplied  with 
water?  There  was  originally  no  greater  mechanical  apti- 
tude, and  no  greater  desire  to  progress,  in  us  than  in  the 
nations  of  northern  Europe.  If  anything,  we  were  com- 
paratively deficient  in  these  respects.  Early  improvements 
in  the  arts  of  life  were  imported.  The  germs  of  our  silk  and 
woolen  manufactures  came  from  abroad.     The  first  water 


io6         PROTECTION   AND   PROGRESS 

works  in  London  were  erected  by  a  Dutchman.    How  hap- 
pens it,  then,  that  we  have  now  reversed  the  relationship '' 

"Manifestly  the  change  is  due  to  difference  of  discipline. 
Having  been  left  in  a  greater  degree  than  others  to  manage 
their  own  affairs,  the  English  people  have  become  self- 
helping  and  have  acquired  great  practical  ability.  While, 
conversely,  that  comparative  helplessness  of  the  paternally 
governed  nations  of  Europe,  illustrated  in  the  above  facts, 
and  commented  upon  by  Laing  in  his  'Notes  of  a  Traveler' 
and  by  other  observers,  is  a  natural  result  of  the  State  super- 
intendence policy — is  the  reaction  attendant  on  the  action 
of  official  mechanisms — is  the  atrophy  corresponding  to  some 
artificial  hypertrophy." 

This  passage  was  published  originally  in  1850,  but  the 
work  in  which  it  appeared  was  abridged  and  revised  in  1892, 
and  its  author  apparently  had  observed  nothing  in  the  mean- 
time to  induce  him  to  change  his  views,  for  he  permitted 
the  paragraphs  to  stand  without  correction.  Yet  the  world 
has  been  afforded  conclusive  evidence  that  the  nations  of 
northern  Europe  have  not  suffered  from  atrophy,  and  none 
are  better  informed  on  that  point  at  present  than  Mr. 
Spencer's  own  countrymen,  who  have  been  driven  to  various 
expedients  to  protect  their  industries  from  the  encroachments 
of  their  "helpless  Continental  neighbors."  The  citation  of 
the  statistics  of  the  industrial  growth  of  Germany  since  1872, 
when  protection  was  adopted  by  that  country,  will  be  suffi- 
cient to  tumble  all  of  the  English  philosopher's  assumptions 
to  the  ground,  for  they  show  indisputably  that  under  a 
policy  of  State  superintendency  and  encouragement  Germany 
has  made  a  relatively  greater  progress  in  manufactures,  and 
in  the  other  arts  indicating  an  advancing  civilization,  than 
Great  Britain  did  before  or  after  the  repeal  of  the  corn  laws. 

Such  a  demonstration,  however,  is  reserved  for  another 
chapter ;  in  this  place  the  desire  is  to  concentrate  attention 
on  the  fact  that  Mr.  Spencer  disingenuously  conceals  the  fact 
that  the  British  reached  the  condition  of  superiority  which 


"THE  WORLD'S  WORKSHOP"  107 

he  described,  and  which  they  undoubtedly  held  when  he 
wrote  in  1850,  by  the  very  methods  which  he  assumed  re- 
sulted in  keeping  northern  Europe  in  a  state  of  helplessness. 
Had  the  English  been  infected  with  the  ideas  of  the  Cobden- 
ites  as  early  as  the  time  of  Edward  HI.  they  would  not  have 
imported  Flemish  weavers  to  teach  them  the  art  of  manu- 
facturing cloth ;  they  would  have  continued  to  import  such 
fabrics  from  Flanders  because  the  Flemings  could  make 
them  more  cheaply,  and  would  consequently  have  remained 
a  pastoral  people,  contentedly  assuming  that  nature  had 
destined  them  to  raise  sheep  so  that  the  Dutch  might  have 
abundant  supplies  of  cheap  wool. 

Had  not  successive  English  sovereigns  and  their  advisers 
devoted  themselves  to  promoting  manufactures  on  British 
soil,  accomplishing  their  purpose  by  shutting  out  the  cheap 
fabrics  and  articles  of  continental  neighbors,  Great  Britain 
would  never  have  acquired  the  capital  which  enabled  her 
enterprising  people  at  a  subsequent  period  to  open  the  min- 
eral fields  near  Freyburg  and  in  other  countries.  Had  there 
been  a  victorious  school  of  Manchester  economists  in  the 
fourteenth  century  the  British  would  never  have  acquired 
the  mechanical  skill  which  Spencer  so  glowingly  describes, 
and  which,  according  to  his  and  other  accounts,  gave  the 
British  an  enormous  advantage  in  all  the  fields  of  industry 
throughout  the  world. 

It  is  singular  that  Spencer,  who,  as  we  have  seen,  lays  so 
much  stress  on  the  results  of  interdependence,  should  over- 
look the  fact  that  the  results  of  a  successful  Cobdenism 
would  have  been  to  promote  a  one-sided  and  therefore  in- 
complete development  of  the  world.  If  the  nations  of  north- 
ern Europe,  whose  helplessness  was  so  marked  in  1850,  had 
remained  content  to  accept  the,  at  that  time,  immeasurably 
cheaper  manufactured  products  of  the  British,  how  many 
important  inventions  would  have  been  lost  to  the  world? 
Does  any  one  imagine  that  the  United  States  would  have 
attained  its  present  high  degree  of  mechanical  skill  if  the 


io8         PROTECTION   AND   PROGRESS 

suggestions  of  the  Cobdenites  had  been  accepted  ?  Would  it 
have  been  possible  for  this  country  to  have  established  a 
manufacturing  industry  if  England  had  been  permitted  to 
follow  out  the  programme  outlined  by  Brougham  and  so 
fully  described  by  McCulloch  when  he  elaborated  his  theory 
that  nature  fitted  some  countries  for  manufacturing  pur- 
poses and  others  to  be  the  producers  of  the  rude  products 
of  the  earth? 

It  has  been  the  fashion  in  the  past  to  deride  what  has 
been  called  the  "infant  industry"  theory,  but  the  efifects  of 
judicious  protection  are  too  pronounced  and  the  examples 
of  its  success  are  too  numerous  to  permit  sane  persons  to 
indulge  in  further  derision.  It  is  now  admitted  by  the  most 
careful  writers  that  the  tendency  of  capital  to  localize  itself 
within  a  country,  unless  interfered  with,  would  manifest 
itself  continually  in  a  more  pronounced  fashion  if  the  whole 
world  were  devoted  to  free  trade.  Nicholson  notes  that 
under  certain  conditions  capital  and  labor  would  not  move  at 
all  or  only  with  great  difficulty ;  that  is  to  say,  that  under 
those  conditions  there  would  be  no  mobility  or  only  imper- 
fect mobility.* 

The  truth  of  this  observation  becomes  manifest  v^hen  we 
consider  the  tendencies  of  capital  and  labor  within  the  nar- 
row sphere  of  a  single  country.  When  we  inquire  into  the 
origins  of  the  industries  we  find  that  many  of  them  were 
established  in  the  places  where  they  now  flourish  owing  to 
the  existence  at  the  time  of  their  establishment  of  fancied 
or  real  natural  advantages.  Once  strongly  rooted,  however, 
they  are  continued,  even  though  the  advantages  primarily 
enjoyed  may  have  entirely  disappeared  and  in  their  stead 
positive  drawbacks  may  have  arisen. 

This  is  certainly  the  case  of  Manchester,  the  original  seat 
of  the  factory  cotton  spinning  and  weaving  industry  of 
Great  Britain.  During  the  years  while  the  United  Kingdom 
enjoyed  superior  advantages  in  the  prosecution  of  this  line 

*Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  295. 


"THE  WORLD'S  WORKSHOP"  109 

of  manufacturing,  enormous  plants  were  created.  These 
prospered  greatly  until  rivals  who  had  refused  to  accept  the 
theory  that  the  cheapness  due  to  acquired  ability  should 
give  a  permanent  advantage  over  people  with  natural  re- 
sources, began  to  compete.  Then  Manchester  was  compelled 
to  resort  to  artificial  devices  to  preserve  the  industry  she 
had  created  from  the  encroachment  of  those  who  were  nearer 
to  the  source  of  supply  of  raw  material. 

At  the  cost  of  a  great  bonded  indebtedness  a  canal  was 
constructed  connecting  Manchester  with  the  sea,  which  was 
opened  in  1894.  During  the  first  year  after  the  construction 
of  this  artificial  waterway  1,280  sea-going  vessels  and  1,660 
boats  for  coast  traffic  passed  up  to  Manchester,  and  for  the 
nine  months  ending  September,  1896,  the  traffic  was  1,300,- 
000  tons,  an  increase  of  350,000  tons  over  the  corresponding 
period  of  the  year  before.  "This  development  within  three 
years,"  remarks  a  writer  who  has  given  especial  study  to 
the  effects  of  ship  canals,  "of  a  trade  approaching  that  of 
Amsterdam  in  volume,  is  not  without  significance,  and  with 
a  continued  increase  Manchester  may  become  an  important 
shipping  point,"  even  though  the  canal  may  from  the  in- 
vestor's point  of  view  be  a  source  of  discouragement  owing 
to  the  heavy  cost  of  construction,  which  was  almost  equal 
to  that  of  the  Suez  canal.* 

This  success  is  indeed  significant,  and  in  many  other  ways 
than  the  one  which  the  writer  had  principally  in  mind.  It 
emphasizes  the  fact  that  capital  can  in  the  face  of  vigorous 
competition  reverse  the  operations  of  natural  laws  for  such 
long  periods  that  they  deserve  to  be  considered  by  people 
who  live  in  the  present  as  practically  permanent.  What, 
then,  would  have  been  the  result  if  the  world  had  acquiesced 
in  the  theory  that  an  acquired  industrial  ability  should  be 
recognized  as  a  natural  advantage  ?    Let  the  reflecting  reader 


♦Fairlie,  Economic  Effects  of  Ship  Canal,  Pub.  Am.  Ass'n  of  Pol. 
and  Social  Science,  April,  1898. 


no    PROTECTION  AND  PROGRESS 

ask  himself  what  mankind  would  have  gained  had  Americans 
and  others  accepted  the  advice  given  by  Mr.  Spencer  in  1850, 
and  instead  of  attempting  to  manufacture  cotton  cloth  for 
themselves  had  sent  their  raw  product  to  Manchester  to  be 
converted  into  fabrics?  Would  it  not  have  resulted  in  the 
creation  of  an  enormous  monopoly,  the  effect  of  which  would 
have  been  to  prevent  the  growth  of  the  use  of  cotton  tex- 
tiles? And  would  not  the  concentration  of  the  industry  in 
one  quarter  of  the  globe  have  militated  against  the  working 
out  of  that  system  of  integration  which  the  author  of  evolu- 
tion extols  and  which  he  assures  us  is  the  distinctive  mark 
of  an  advancing  civilizat'on  ? 

If  the  tendency  of  capital  is  as  here  described  it  is  clear 
that  a  resort  to  artificial  means  of  dispersion  of  industry  is 
necessary  if  the  world  is  to  be  saved  from  a  sharp  division 
into  superior  and  inferior  nations.  Without  such  a  disper- 
sion a  few  countries  would  enjoy  ail  the  profits  of  a  highly 
developed  civilization,  with  its  great  cities,  universities, 
museums  and  the  other  accessories  which  contribute  to  the 
broadening  of  the  minds  of  men  and  minister  to  their  grati- 
fication, while  the  others  would  remain  producers  of  raw 
materials  and  food  products,  whose  inhabitants  would  be  as 
"hewers  of  wood  an.d  drawers  of  water"  for  the  more  favored 
peoples. 

Had  Americans  accepted  the  role  marked  out  for  them 
by  the  Manchester  school  there  would  have  been  no  advance 
from  the  homogeneous  to  the  heterogenous  in  the  United 
States.  Simple  conditions  would  have  prevailed  indefinitely. 
The  producers  of  rude  products,  unless  influenced  by  envi- 
ronment, advance  but  slowly.  The  conditions  which  prevail 
in  a  purely  agricultural  country  are  repeated  century  after 
century,  and  there  is  reason  to  believe  that  when  such  peo- 
ples are  left  to  their  own  devices  they  will  retrograde. 

There  is  abundant  evidence  that  the  Gauls  before  the 
advent  of  the  Romans  had  made  much  progress  in  the  manu- 
facture of  agricultural  implements.     Pliny  tells  us  "there 


"THE  WORLD'S  WORKSHOP"  in 

has  been  invented  at  a  comparatively  recent  period  in  that 
part  of  Gaul  known  as  Rhaetia  a  plow  with  the  addition  of 
two  small  wheels  and  known  by  the  name  of  plaumorati,  the 
extremity  of  the  share  of  which  has  the  form  of  a  spade,  and 
which  is  only  used  in  cultivated  fields  and  upon  soils  which 
are  nearly  fallow."*  The  same  author  also  tells  us  that  "in 
the  vast  domain  of  Gaul,  a  large  hollow  frame  armed  with 
teeth  and  supported  on  two  wheels  is  driven  through  the 
standing  corn,  the  beasts  being  yoked  behind  it,  the  result 
being  that  the  ears  are  torn  off  and  fall  within  the  frame. "f 

These  devices  for  cultivating  and  harvesting  were  so 
incomparably  superior  to  those  employed  by  the  Romans 
that  the  idea  at  once  occurs  that  those  who  used  them  must 
have  been  in  contact  with  a  people  who  had  developed  con- 
siderable mechanical  ingenuity.  When  we  inquire  into  the 
matter  we  find  that  in  sections  of  Gaul  greater  progress  had 
been  made  in  the  manufacture  of  iron  and  other  metals  than 
the  Romans  had  achieved.  Pliny  and  Strabo  testify  to  this, 
and  a  modern  historian  who  gave  attention  to  this  phase  of 
Gallic  development  admits  that  the  evidence  is  clear  on  this 
point.  He  tells  us  that  "their  copper  implements  were  not 
infrequently  of  excellent  workmanship ;  that  the  carefully 
adjusted  gold  couns  of  the  Auvernians  were  striking  wit- 
nesses of  the  ability  of  the  Celtic  workers  ;  that  the  Romans 
learned  the  art  of  tinnmg  from  the  Bituirges  and  that  of 
silvering  from  the  Alesini."| 

It  is  impossible  to  avoid  linking  these  facts  together,  and 
consideration  of  them  forces  the  conviction  that  the  progress 
made  by  the  Gauls  in  agriculture  was  largely  owing  to  the 
synchronous  development  of  other  industries.  In  later 
times,  when  disorder  and  other  causes  contributed  to  the 
destruction  of  manufacturing  ability  in  Gaul,   agriculture 


♦Pliny,  Natural  History,  Book  XVIII,  Chap.  XLVIII. 

flbid,  Book  XVIII,  Chap.  LXXII. 

jMommsen,  History  of  Rome,  Book  V,  Chap.  VII. 


112         PROTECTION  AND  PROGRESS 

shared  in  the  decadence.  The  improved  implements  above 
described,  whose  characteristics  strongly  resemble  certain 
nineteenth  century  inventions,  fell  into  disuse,  and  finally, 
during  the  period  when  the  country  once  known  as  Gaul 
became  purely  agricultural,  the  farmer  reverted  to  the 
wooden  plow  and  employed  the  rudest  imaginable  devices 
for  cultivating  the  soil  and  harvesting  his  crops. 

In  Italy  during  the  Empire  agriculture  and  market  gar- 
dening particularly  had  attained  a  high  degree  of  perfec- 
tion. Under  the  stimulus  of  the  demand  of  a  great  town 
population  the  poulterer  had  developed  artificial  incubation 
to  such  an  extent  that  the  Romans  were  chiefly  supplied  with 
machine-produced  poultry.*  When  the  Roman  power  de- 
cayed and  Italy  reverted  to  agriculture  this  art  was  lost  and 
not  revived  until  the  demands  of  great  commercial  nations 
made  its  practice  profitable. 

These  instances  might  be  supplemented  with  hundreds  of 
others  all  pointing  to  the  snail-like  pace  made  by  peoples  in 
their  progress  towards  heterogenity  whenever  there  is  a 
failure  to  bring  about  that  complete  interdependence  which 
lesults  from  the  calling  into  play  of  the  inventive  faculties 
of  man  by  diversifying  industries.  Many  modern  econo- 
mists, misled  by  the  apparent  advantages  of  the  subdivision 
of  labor,  have  failed  to  recognize  that  the  principle  may  be 
carried  too  far.  They  have  assumed  that  because  subdivision 
works  well  within  limitations  the  principle  cannot  be  carried 
to  excess,  but  it  is  obvious  that  if  the  effect  of  completely 
developing  along  such  lines  would  be  to  make  one  country 
the  manufacturer  of  finished  articles  and  all  the  rest  of  the 
world  a  producer  of  raw  products,  mankind,  as  a  whole, 
would  not  be  a  gainer.  The  outcome  of  such  a  development 
would  be  one  overmastering  nation,  with  all  the  advantages 
which  wealth  and  knowledge  confer,  and  various  feeble 
peoples  with  wants  and  aspirations  little  beyond  those  of 
yokels,  and  entirely  dependent  upon  the  superior  people. 

*Pliny,  Natural  History,  Book  X,  Chap.  LXXVI. 


"THE  WORLD'S  WORKSHOP"  113 

That  many  Cobdenites  hoped  that  their  poUcy  would 
achieve  such  a  result  is  undeniable,  and  that  others  who  at- 
tempted to  elaborate  theories  designed  to  show  that  mankind 
would  be  benefited  by  accepting  the  assumption  that  Great 
Britain  was  peculiarly  fitted  to  be  the  world's  workshop 
were  working  toward  the  same  end  seems  equally  certain. 
Had  they  succeeded  there  can  be  no  doubt  that  the  spread 
of  civiHzation  would  have  been  greatly  retarded.  Had  the 
United  States  and  other  nations  which  have  deemed  it  pru- 
dent to  secure  for  themselves  home  manufacturing  industries 
by  making  temporary  sacrifices  been  diverted  from  their  pur- 
pose by  the  arguments  in  favor  of  cheapness  the  result  would 
have  been  an  universal  arrest  of  development. 

To  have  accepted  as  sound  the  conclusion  that  a  superior- 
ity in  the  matter  of  production  which  was  the  result  of  the 
acquired  ability  of  a  certain  people  is  the  equivalent  of  a 
natural  advantage  would  have  been  fatal  to  progress.  It 
must  have  inevitably  resulted  in  the  atrophy  of  the  peoples 
assenting  to  the  idea  that  they  would  serve  themselves  best 
by  refusing  to  develop  all  the  resources  at  their  command, 
and  it  would  have  entailed  upon  the  nation  enjoying  the 
monopoly  of  manufacturing  all  the  evils  which  flow  from 
excessive  power,  not  the  least  of  which  would  be  the  neces- 
sity of  keeping  in  subjection  the  envious  barbarians  which 
such  a  system  must  have  called  into  existence. 


CHAPTER  VI. 

INTERNATIONAL  FRICTION. 

THE    FALLACY    OF    THE    COBDENIST    IDEA    THAT    FREE    TRADE 
MAKES  FOR  PEACE, 

Why  Cobdenism  fails  to  promote  peace — The  prevalence  of  the 
national  idea — Objects  of  protectionists  misrepresented — A  de- 
sire to  injure  others  could  never  operate  as  a  successful  stimu- 
lant of  trade — No  industry  promoted  except  by  a  desire  for 
gain — Protection  necessary  to  equalize  taxation — Burdens  volun- 
tarily assumed  by  Americans  to  carry  out  their  views  of  gov- 
ernment— International  friction  due  to  the  aggressive  attitude 
of  nations  desiring  to  export  their  surplus  products — Free  trade 
responsible  for  numerous  wars  waged  to  advance  trade — Con- 
tinuous aggression  and  carnage  the  record  of  Great  Britain 
since  the  repeal  of  the  corn  laws — England's  unhealthy  commer- 
cial development  responsible  for  most  modern  wars — What  must 
happen  to  Great  Britain  when  the  opportunities  for  expansion 
cease — The  non-scientific  character  of  the  present  system  of 
international  trade — It  must  give  way  to  a  rational  exchange  of 
non-competing  products — Absurdities  of  roundabout  foreign 
trade — Example   of   Brazil. 

In  the  course  of  the  examination  of  the  view  held  by  the 
early  Cobdenites  that  the  countries  of  the  world  were 
divided  by  nature  in  such  a  manner  as  to  make  some  of 
them  fit  only  to  be  producers  of  raw  materials  and  food 
products,  while  others  were  adapted  to  manufacturing,  it 
was  seen  that  Britain's  greatest  thinkers  had  permitted  them- 
selves to  confuse  natural  and  acquired  abilities.  Some  of 
the  possibilities  that  would  have  ensued  had  this  theory 
been  generally  accepted  were  glanced  at,  and  others  were 

reserved  for  further  and  more  ample  treatment.     In  this 

114 


INTERNATIONAL  FRICTION  115 

chapter  an  inquiry  will  be  instituted  to  ascertain  the  prob- 
able effect  upon  international  relations  had  Cobdenism  been 
accepted  without  reserve  by  the  whole  world. 

At  one  time  it  was  assumed  by  the  adherents  of  the  Man- 
chester school  that  free  trade,  so  called,  would  bring  peace 
and  good  will  to  the  whole  earth..  Writers  with  percep- 
tion enough  to  distinguish  that  the  springs  which  have 
moved  men  in  all  times  and  all  countries  were  oftener  of  a 
commercial  than  a  political  nature  rashly  concluded  that 
the  substitution  of  unrestrained  competition  for  the  crude 
devices  resorted  to  in  ancient  and  modern  times  to  promote 
naional  industries  would  remove  from  rural  peoples  the 
incentive  to  make  war  on  each  other.  A  brief  experience 
has  demonstrated  the  fallacy  of  this  view,  which  never 
would  have  found  adherents  had  not  the  theory  of  the  divis- 
ion of  the  earth  into  nations  with  varying  capacities  and 
resources  been  elaborated. 

Had  there  been  any  foundation  for  the  assumption  that 
Great  Britain  was  destined  by  nature  to  be  the  world's 
workshop ;  had  it  been  demonstrable  that  the  British  enjoyed 
advantages  as  manufacturers  which  no  other  people  could 
hope  to  equal;  had  there  been  any  truth  in  the  assertion 
that  Britons  were  endowed  with  abilities  which  would  always 
make  them  more  skillful  than  other  men,  there  might  have 
been  a  ready  acquiescence  in  the  idea  that  mankind  gen- 
erally would  profit  if  the  industrial  status  of  the  nations 
as  established  in  1850  should  be  considered  final. 

But  none  of  these  claims  was  sound.  It  was  instinctively 
perceived  by  the  people  of  all  the  western  nations  that  Eng- 
land's superiority  was  merely  the  result  of  acquired  ability, 
and  the  processes  by  which  British  skill  was  promoted  were 
perfectly  familiar  to  all  readers  of  history.  Under  the  cir- 
cumstances, it  would  have  been  amazing  had  practical  states- 
men acepted  any  of  the  more  pronounced  views  of  the  Man- 
chester school. 

Closet  thinkers,  accustomed  to  accomplishing  the  marvel- 


Ii6        PROTECTION  AND   PROGRESS 

ous  feat  of  creating,  in  their  minds,  a  perfectly  homogen- 
eous world,  with  peoples  having  identical  interests,  found 
no  difficulty  in  assenting  to  propositions  which  assumed  the 
possibility  of  obliterating  by  economic  processes  national 
distinctions,  race  prejudices  and  all  the  results  of  thousands 
of  years  of  differentiation.  But  practical  men,  outside  of 
Great  Britain,  unless  blinded  by  self-interest,  universally  re- 
jected the  professed  benefits  of  Cobdenism  and  elected  to 
work  out  their  own  industrial  problems  without  the  assis- 
tance of  British  advice,  relying  upon  the  teachings  of  Brit- 
ish experience  rather  than  upon  the  guidance  of  visionaries. 

The  refusal  to  regard  theories  with  more  reverence  than 
the  teachings  of  experience  has  subjected  protectionists  to 
much  misrepresentation.  Their  objects  have  never  been  fairly 
stated  by  Cobdenites,  who  have  not  hesitated  to  attribute 
to  them  motives  and  purposes  of  which  they  are  entirely 
innocent.  Such  a  course  was  forced  upon  the  Manchester 
school,  whose  adherents  found  it  necessary  to  provide  a 
foil  to  bring  into  relief  the  virtues  claimed  for  their  system. 

As  an  illustration  of  this  system  of  perversion  we  may 
quote  the  following  assertion  of  Professor  Rogers:  "As 
the  origin  of  protective  enactments  was  a  desire  that  a 
nation  should  profit  by  the  loss  of  another  nation,  and  as 
the  extension  of  this  feeling  is  the  primary  motive  of  war, 
so  a  permanent  or  persistent  division  of  international  inter- 
ests, with  the  objects  of  sustaining  or  promoting  municipal 
or  rather  particular  interests,  is  a  fruitful  source  of  inter- 
national difficulties.  It  is,  in  fact,  what  Thucydides  calls, 
speaking  of  the  caution  with  which  commercial  intercourse 
was  carried  on  in  the  days  which  preceded  the  great  Pelopon- 
nesian  war,  an  unproclaimed  war."* 

Now,  there  is  absolutely  no  foundation  for  the  assump- 
tion that  protection  was  inspired  by  any  such  desire  as 
that   referred   to.     Unless   the  authorities   already   quoted 


*Rogers,  Article  "Free  Trade,"  Ency.  Brit. 


INTERNATIONAL   FRICTION  117 

are  unreliable  we  must  assume,  in  the  case  of  the  English 
protectionists  at  least,  that  the  prime  purpose  of  those  who 
advocated  restrictions  upon  the  importation  of  foreign  goods, 
or  the  exportation  of  domestic  products,  was  to  promote 
home  industry  or  in  some  other  way  to  subserve  the  interests 
of  Englishmen. 

Simon  de  Montfort,  Edward  III  and  his  councilors,  and 
Elizabeth  and  her  advisers  were  all  animated  by  the  com- 
mon purpose  of  providing  work  for  the  British  people,  and 
of  otherwise  improving  their  condition,  when  they  attempted 
by  restrictive  measures,  directed  against  foreigners,  to  stim- 
ulate manufacturing  within  the  kingdom.  And  Mun,  whose 
contemporary  statement  of  the  motives  of  eighteenth  cen- 
tury English  protectionists  is  more  reliable  than  the  impu- 
tations of  a  nineteenth  century  free  trader  who  had  a  point 
to  make,  has  assured  us  in  the  most  explicit  terms  that  the 
object  of  those  who  agreed  with  him  was  "to  make  the  most 
they  could  of  their  own." 

This  has  been  the  consistent  aim  of  protectionists  in  all 
times,  and  it  is  the  only  one  which  rational  men  can  be 
expected  to  pursue.  That  the  pursuit  of  such  a  policy  does 
often  work  an  injury  to  a  rival  may  be  admitted,  but  it 
is  absurd  to  assume  that  it  is  the  purpose  of  those  who 
are  trying  to  advance  their  own  interests  by  developing 
near  at  hand  resources  to  inflict  injuries  upon  others  by 
pursuing  such  a  course.  As  well  might  the  charge  be  made 
that  it  is  the  object  of  every  tradesman  who  starts  a  new 
store  in  opposition  to  those  already  established  to  injure 
those  who  had  previously  occupied  the  field.  That  may 
be  the  result  of  the  new  venture,  which  may  cut  down  the 
trade  of  those  who  were  earlier  on  the  ground,  but  the 
fresh  competitor  must  be  assumed  to  have  entered  the  com- 
petition for  personal  gain  and  not  to  gratify  a  desire  to 
injure  others. 

This  latter  motive  could  never  be  sufficiently  strong  to 
promote  a  genuine  rivalry  in  trade,  and  it  may  be  asserted 


ii8        PROTECTION   AND  PROGRESS 

with  positiveness  that  it  does  not  operate  in  the  case  of 
nations  any  more  than  with  individuals.  Had  the  free 
traders  not  misled  themselves  on  this  point  they  might 
have  escaped  the  blunder  of  assuming  that  the  framers  of 
protective  measures  could  never  achieve  their  object  of  build- 
ing up  a  profitable  business. 

It  was  natural  enough,  however,  for  men  who  had  delib- 
erately adopted  the  idea  that  protection  was  based  on  a 
desire  to  do  injury  to  others  to  conclude  that  such  a  policy 
could  never  succeed.  Had  they  studied  human  nature  more 
closely  they  would  have  perceived  that  only  a  desire  for 
gain  could  be  at  the  bottom  of  a  long-continued  effort  to 
develop  a  national  industry,  and  that  motives  of  the  sort 
described  by  Rogers  and  others  would  be  absolutely  ineffec- 
tive in  the  face  of  even  a  pronounced  suspicion  that  the 
policy  of  revenge  was  unprofitable. 

The  facts  of  history  and  the  suggestions  of  common  sense 
unite  in  refuting  the  Cobdenite  idea  that  the  object  of  protec- 
tionists is  to  injure  their  neighbors,  but  it  may  be  worth 
while  to  inquire  whether  the  adoption  of  a  protective  pol- 
icy— which  simply  means,  according  to  the  modern  definition 
of  the  term,  a  resort  to  such  methods  of  taxation  as  will 
favor  the  home  as  against  the  foreign  producer — is  calculated 
to  cause  friction  among  nations,  and,  if  so,  whether  it  should 
be  avoided  on  that  account ;  and,  on  the  other  hand,  it  may 
be  well  to  investigate  the  claim  that  free  trade  would  bring 
peace  to  the  whole  world,  as  was  assumed  by  Cobden, 
Bright  and  others. 

Touching  the  first  branch  of  the  subject,  it  may  be  freely 
admitted  that  when  a  country  undertakes  to  develop  its 
own  resources  it  immediately  excites  the  jealousy  of  for- 
eigners who  have  hitherto  supplied  the  articles  which  under 
the  changed  conditions  will  be  produced  at  home,  but  exam- 
ples of  wars  waged  on  such  an  account  are  extremely  rare, 
and  none  is  likely  to  occur  in  the  future.  At  least,  if 
they  do  the  fact  that  they  result  from  such  a  cause  will 


INTERNATIONAL   FRICTION  119 

be  carefully  obscured,  for  no  modern  statesman  dare  openly 
advocate  the  doctrine  that  a  nation  has  not  the  right  to 
absolutely  regulate  its  own  system  of  trade  and  taxation. 

Nothing  short  of  the  adoption  of  an  universally  homo- 
geneous system  of  commerce  and  fiscal  management  would 
warrant  a  surrender  of  the  sovereign  right  of  regulating 
trade  by  a  nation,  and  as  such  a  union  of  the  nations  is 
inconceivable;  all  theories  based  on  assumptions  of  what 
might  occur  if  the  question  of  nationality  were  eliminated 
may  be  dismissed  as  valueless. 

As  long,  therefore,  as  nations  maintain  different  systems 
of  government  and  are  animated  by  varying  political  ideas 
and  sociotogical  considerations  there  can  be  no  such  thing 
as  perfect  equality  of  taxation.  The  United  States  has 
elected  to  reward  the  survivors  and  the  dependents  of  those 
who  fought  for  the  Union  in  the  Civil  War  by  paying  pen- 
sions which  amount  to  as  large  a  sum  annually  as  that 
paid  to  maintain  the  greatest  military  establishment  in  the 
world ;  the  various  states  composing  the  federal  union  have 
imposed  upon  themselves  an  annual  burden  for  educational 
purposes  vastly  exceeding  that  borne  by  the  people  of  any 
other  country  to  promote  a  similar  object.  In  many  respects 
the  views  of  Americans  regarding  the  administration  of  gov- 
ernments, national,  state  and  municipal,  differ  radically 
from  those  of  other  peoples,  and  the  carrying  out  of  these 
views  entails  upon  the  citizens  of  this  country  taxation  for 
purposes  to  which  the  foreigner  is  a  stranger. 

The  American  people  bear  these  burdens  cheerfully,  be- 
cause they  are  voluntarily  assumed,  but  they  would  not 
continue  doing  so  if  they  were  compelled  to  witness  the 
spectacle  of  the  foreigner  enjoying  an  advantage  over  them 
in  their  own  markets. 

That  such  an  advantage  would  be  afforded  if  American 
ports  were  freely  opened  to  the  importation  of  competing 
foreign  goods  is  undeniable.  If  the  English  manufacturer 
of  articles  of  iron  and  steel  is  permitted  to  sell  his  prod- 


120         PROTECTION  AND  PROGRESS 

ucts  in  the  United  States  without  paying  an  equaUzing  tax 
in  the  shape  of  a  customs  duty,  he  enjoys  a  positive  advan- 
tage over  the  American  manufacturer,  who  has  been  called 
upon  to  contribute  to  the  creation  of  the  pension  fund,  who 
assists  in  maintaining  our  costly  system  of  common  school 
education  and  who  helps  bear  the  other  burdens  of  taxation 
peculiar  to  the  nation,  state  or  municipality  in  which  he  lives 
and  works. 

It  is  no  answer  to  this  assertion  that  a  protective  tax  is 
equitable  to  say  that  the  manufacturers  of  other  nations 
are  also  taxed,  perhaps  more  heavily  than  those  of  the  United 
States.  That  may  be  true,  but  the  taxation  of  the  foreigner 
may  be  levied  to  accomplish  aims  entirely  different  from 
those  of  the  protective  country.  He  may  even  impose  taxes 
for  the  purpose  of  destroying  the  trade  of  rivals. 

As  an  illustration.  Great  Britain  maintains  an  enormously 
expensive  navy,  ostensibly  for  defensive  purposes,  but  really 
to  further  the  main  object  of  her  fiscal  system — the  exten- 
sion cf  her  external  commerce.  The  assumption  is  that 
the  British  manufacturer  assists  in  supporting  this  estab- 
lishment and  that  he  does  so  out  of  the  profits  of  his  indus- 
try. This  being  the  case,  the  foreigner  who  affords  the 
Briton  free  access  to  his  markets  occupies  the  anomalous 
position  of  indirectly  contributing  to  the  resources  employed 
to  maintain  a  navy  whose  chief  function  is  to  keep  open 
the  avenues  of  British  trade. 

No  sophistries  or  alluring  presentation  of  the  benefits 
of  cheapness  can  disguise  this  fact.  It  is  plainly  perceived 
by  practical  men  who  do  not  allow  their  minds  to  become 
clouded  by  partial  statements  of  a  case,  but  who  insist  upon 
examining  it  in  all  its  bearings.  The  result  of  such  scru- 
tiny is  the  practical  rejection  of  the  free  trade  theory  by  all 
peoples  possessing  the  progressive  instinct. 

It  being  indisputable  that  there  are  different  national  aspi- 
rations and  methods  of  government  which  result  in  inequali- 
ties of  taxation,  and,  further,  that  there  is  absolutely  no 


INTERNATIONAL   FRICTION  121 

prospect  of  the  elimination  of  these  differences,  the  most 
sanguine  free  trader  expressing  no  such  hope,  it  is  unde- 
niable that  nations  have  a  moral  right  to  adopt  such  meas- 
ures as  will  enable  them  to  pursue  the  course  which  the 
genius  of  their  institutions  prompts  them  to  follow. 

If  Americans  persist  in  the  desire  to  broaden  the  national 
intelligence,  and  to  that  end  go  on  increasing  their  costly 
common  school  system,  it  does  not  lie  in  the  mouth  of  Ger- 
mans, who  expend  great  sums  on  their  military  establish- 
ment, or  of  the  British,  who  appropriate  vast  amounts  for 
their  navy  and  the  maintenance  of  paupers,  to  say  that  we 
may  not  so  adjust  our  system  of  taxation  that  the  burdens 
of  the  home  producer  will  be  equalized  in  the  event  of  the 
admission  of  foreign  competing  products  to  the  markets  of 
the  United  States. 

Nor  is  it  good  logic  or  fair  reasoning  for  authors  of  stand- 
ing to  assume  that  a  people  who  practice  an  economic  policy 
based  upon  the  recognition  that  it  equitably  adjusts  the  dif- 
ferences, artificial  or  natural,  which  may  exist  between  na- 
tions should  be  held  responsible  for  friction  that  may  grow 
out  of  their  refusal  to  be  exploited  at  the  expense  of  for- 
eigners. It  would  be  as  reasonable  to  charge  an  inoffensive 
citizen  who  was  attacked  by  a  vicious  bulldog  while  walking 
a  public  street  with  being  the  aggressor  as  it  is  for  free 
traders  to  assert  that  collisions  between  nations  which  are 
clearly  traceable  to  the  persistent  efforts  of  peoples  with 
established  industries  to  force  their  wares  on  those  who  do 
not  want  them  are  due  to  protection. 

In  any  aspect  of  the  case  it  is  impossible  to  make  it  appear 
that  the  exercise  by  a  nation  of  the  right  of  regulating  taxa- 
tion so  as  to  give  its  own  producers  an  equal  show  in  the 
home  market  affords  a  reasonable  pretext  for  making  war, 
and,  as  has  already  been  observed,  there  are  few,  if  any, 
instances  of  war  resulting  directly  from  the  exercise  of  this 
right. 

It  may  be  safely  affirmed  that  there  is  absolutely  no  in- 


122         PROTECTION   AND   PROGRESS 

stance  of  a  protective  nation  having  created  a  difficulty  seri- 
ous enough  to  justify  a  rival  proceeding  to  extreme  meas- 
ures. But  that  much  cannot  be  said  for  free  trade  England. 
Instead  of  setting  an  example  of  peace  since  the  repeal  of 
the  corn  laws  Great  Britain  has  been  constantly  making 
war,  and  for  no  other  purpose  than  the  extension  of  trade. 
A  pretense  is  sometimes  made  that  these  conflicts  were 
forced  upon  her,  but  the  excuse  commands  no  more  respect 
than  that  offered  by  the  wolf  when  it  descended  the  stream 
to  kill  the  lamb  for  roiling  the  water. 

During  the  progress  of  the  recent  jubilee  an  English 
writer  took  occasion  to  enumerate  these  aggressive  wars. 
He  said :  "The  Victorian  Age  has  been  one  of  peace,  but 
on  examination  it  will  be  found  that  Great  Britain  has  not 
been  long  without  fighting  somewhere.  Scarcely  a  twelve- 
month has  passed  without  finding  our  country  at  war  in 
some  part  of  the  world.  The  following  is  a  list  of  these 
wars:  Afghan  war,  1838-40;  first  China  war,  1841 ;  Sikh 
war,  1845-46;  Kaffir  war,  1846;  second  war  with  China, 
second  Afghan  war,  1849 ;  Burmese  war,  1850 ;  second  Kaffir 
war,  1851-52;  second  Burmese  war,  1852-53;  Crimea,  1854; 
third  war  with  China,  1856-58;  Indian  mutiny,  1857;  Maori 
war,  1860-61 ;  more  wars  with  China,  1860-62;  second  Maori 
war,  1863-66;  Ashantee  war,  1864;  war  in  Bhotan,  1864; 
Abyssinian  war,  1867-68;  war  with  the  Bazatees,  1868; 
third  Maori  war,  1868-69;  war  with  Looshias,  1871 ;  second 
Ashantee  war,  1873-74;  third  Kaffir  war,  1877;  Zulu  war, 
1878-79;  third  Afghan  war,  1878-80;  war  in  Basutoland, 
1879-81 ;  Transvaal  war,  1879-81 ;  Egyptian  war,  1882 ;  Sou- 
dan, 1884-85-89;  third  Burma  war,  1885-92;  Zanzibar,  1890; 
India,  1890;  Matabele  war,  1894-96;  Chitral  campaign,  1895  ; 
third  Ashantee  campaign,  1896;  second  Soudan  campaign, 
1896."* 

When  this  bloody  record  of  free  trade  Great  Britain  is 

*North  China  Daily  News,  November,  1896. 


INTERNATIONAL   FRICTION  123 

compared  with  the  annals  of  a  protective  country  such  as 
the  United  States  it  seems  amazing  that  any  writer  should 
have  the  hardihood  to  assert  that  the  tendencies  of  Cobdenism 
are  peaceful  and  those  of  protection  the  opposite.  During  the 
period  embraced  in  the  Victorian  era  the  United  States  waged 
but  two  external  wars — those  with  Mexico  and  Spain.  The 
first  was  inspired  by  men  with  Cobdenite  proclivities,  their 
object  being  to  develop  the  country  along  the  lines  which 
the  adherents  of  the  Manchester  school  taught  were  the 
only  ones  that  could  contribute  to  the  prosperity  of  the 
American  people.  That  with  Spain  in  its  inception  was  a 
war  for  the  sake  of  relieving  a  distressed  people.  During 
the  rest  of  the  time,  with  the  exception  of  the  years  of  our 
own  Civil  War — precipitated  by  free  traders  who  were 
largely  impelled  to  their  course  by  British  Cobdenites — 
Americans  were  busily  employed  developing  their  home 
resources,  at  peace  with  the  world  and  giving  no  neighbor 
cause  for  offense  unless  it  may  be  charged  that  the  mani- 
festation of  the  intention  to  render  the  nation  as  little  de- 
pendent upon  foreigners  as  possible  was  offensive. 

No  such  claim  can  be  made  for  Great  Britain  and  Brit- 
ish free  traders.  When  the  causes  of  the  above  list  of  wars 
are  inquired  into  it  is  found  that  every  one  of  them  was 
directly  or  indirectly  brought  about  by  the  necessity  of  ex- 
tending the  markets  of  the  manufacturers  of  the  United 
Kingdom  or  to  collect  the  debts  incurred  by  improvident 
peoples  who  were  incapable  of  realizing  that  whenever  the 
Briton  bears  abroad  the  torch  of  civilization,  by  introduc- 
ing English  habits  and  wares,  he  follows  up  his  philanthropic 
movement  with  a  big  bill  which  must  be  paid. 

No  juggling  with  words  can  alter  or  conceal  this  fact. 
All  the  fantastic  talk  about  the  benefits  of  commercial  inter- 
course will  not  suffice  to  obscure  the  predatory  character 
of  British  warfare  and  its  impelling  cause,  and  it  may  be 
said  that  no  such  attempt  is  seriously  made  by  English  writ- 
ers.    The  singers  of  jubilee  odes  and  the  scribblers  of  eco- 


124        PROTECTION  AND  PROGRESS 

nomic  theories  made  to  fit  the  necessities  of  British  trade 
occasionally  indulge  in  laudation  of  the  beauties  of  the  mod- 
ern intercourse  promoted  by  Great  Britain,  but  there  are 
plenty  of  honest  Englishmen  who  freely  admit  that  the 
methods  resorted  to  by  the  English  of  today  to  extend  and 
preserve  their  foreign  trade  are  as  ruthless  and  cruel  as 
those  practiced  by  the  Spaniards  in  their  search  for  gold  in 
America  three  or  four  centuries  ago. 

Cobdenism  could  not  easily  result  otherwise.  The  un- 
healthy impulse  given  to  the  development  of  British  resources 
by  the  ism  has  made  such  a  course  necessary.  The  pres- 
sure of  population  and  the  inequalities  of  wealth  compel 
a  constant  search  for  means  of  relief.  The  industrial  con- 
dition of  the  United  Kingdom  today  resembles  more  than 
anything  else  that  of  a  person  inflicted  with  an  inflamed 
and  angry  tumor,  the  supperation  of  which  must  be  assisted 
to  save  the  patient's  life.  England  today  must  be  assisted 
by  the  Government  in  order  to  relieve  the  humors  and  to 
save  the  body  politic.  The  commercial  wars  constantly 
waged  by  the  British  are  the  equivalent  of  the  relief  afforded 
by  the  discharge  of  pus.  When  success  refuses  to  further 
attend  such  efforts,  when  there  are  no  more  markets  to 
open,  the  patient  must  succumb. 

That  free  trade  is  responsible  for  this  condition  is  indis- 
putable. It  is  impossible  to  deny  that  the  British  have  laid 
up  extraordinary  stores  of  wealth  since  the  inauguration 
of  the  policy  of  maintaining  open  markets,  but  that  does 
not  affect  the  question  at  issue,  which  is,  Can  the  United 
Kingdom  permanently  maintain  its  inordinately  large  popu- 
lation in  the  face  of  the  growing  competition  of  other  na- 
tions rapidly  achieving  industrial  independence  and  which 
are  apparently  determined  to  contest  with  Great  Britain 
for  the  trade  of  the  few  peoples  without  capacity  or  ambi- 
tion enough  to  provide  for  themselves?  If  this  is  answered 
in  the  negative,  as  it  must  be,  then  free  trade,  or  Cobden- 


INTERNATIONAL   FRICTION  125 

ism,  will  stand  forth  as  a  confessed  failure,  because  it  has 
created  a  condition  which  cannot  be  maintained. 

When  true  economy  is  practiced  throughout  the  civilized 
world,  when  the  workshop  and  the  producer  are  brought 
closer  together,  then  Great  Britain  will  shrink  to  her  proper 
proportions.  It  will  be  impossible  then  for  the  secondary 
work  of  roundabout  trading  to  retain  its  present  import- 
ance, for  the  future  economist  will  teach  and  the  sensible 
man  will  act  on  the  theory  that  unnecessary  transportation 
is  a  source  of  waste  and  must  be  eliminated  as  nearly  as 
possible  from  perfected  industrial  systems. 

When  the  soundness  of  this  theory  is  clearly  perceived  a 
rational  external  trade  will  take  the  place  of  that  now  in 
vogue.  Men  will  cease  to  commit  the  absurdity  of  buying 
at  a  distance  of  thousands  of  miles  and  importing  at  great 
cost  articles  which  they  can  have  manufactured  as  cheaply 
at  their  own  doors.  When  this  high  stage  of  industrial 
and  commercial  development  aimed  at  by  protectionists  is 
attained,  exchanges  between  nations  will  be  confined  to 
non-competing  products.  In  this  term  are  included  all  those 
things  which  cannot  be  produced  as  cheaply  by  one  people 
as  another,  not  because  of  acquired  abilities,  for  protec- 
tion assumes  that  most  enlightened  people  can  reach  the 
same  plane  of  industrial  ability  if  they  make  the  effort  and 
persevere  in  it  long  enough,  but  on  account  of  some  natural 
drawback,  such  as  climate  or  lack  of  a  particular  raw 
material. 

When  such  a  trade  supplants  the  wasteful  and  unscien- 
tific system  of  industrial  exchange  now  prevalent  friction 
between  nations  will  be  reduced  to  a  minimum.  It  is  incon- 
ceivable that  the  people  of  a  country  incapable  of  growing 
coflFee  should  view  with  disfavor  the  importation  of  that 
commodity  if  it  was  procured  by  exchanging  for  it  articles 
manufactured  from  iron  or  steel  produced  by  those  intend- 
ing to  consume  the  berry ;  but  the  importation  of  manufac- 
tured articles  by  nations  with  the  capacity  to  produce  similar 


126         PROTECTION   AND  PROGRESS 

articles  must  always  prove  a  source  of  irritation.  The  first 
named  system  of  exchange  is  an  excellent  exemplar  of  a 
rational  foreign  trade;  the  latter  furnishes  a  concrete  illus- 
tration of  the  folly  of  wastefulness,  and  is  no  more  com- 
mendable or  worthy  of  imitation  than  the  swapping  of 
jackknives  for  the  mere  love  of  barter. 

Still  more  productive  of  bad  feeling  is  the  trade  which 
Adam  Smith  designates  as  the  roundabout  trade  of  foreign 
consumption.  Applying  the  coffee  illustration  to  this  sys- 
tem of  foreign  trading  brings  into  relief  all  of  its  exas- 
perating features.  Taking  the  three-sided  relations  of  Bra- 
zil, the  United  States  and  Great  Britain  in  the  conduct  of 
this  particular  sort  of  trade  into  consideration  we  find  these 
absurdities :  The  United  States  imports  from  Brazil  in 
a  single  year  $78,831,476  worth  of  produce,  chiefly  coffee, 
and  that  country  takes  American  products  to  the  value  of 
$13,827,914  in  exchange;  Great  Britain,  a  relatively  small 
consumer  of  Brazil's  leading  product,  in  the  same  year  im- 
ported various  kinds  of  produce  from  that  country  to  the 
value  of  $19,700,345,  and  exported  merchandise,  principally 
manufactured  articles,  to  the  value  of  $37,629,830.  The 
balance  adverse  to  the  United  States  was  $65,003,562,  while 
Great  Britain's  favorable  balance  was  $17,929,485. 

It  only  needs  to  be  added  to  this  that  the  English  exports 
to  Brazil  were  composed  chiefly  of  manufactures  of  cotton, 
of  iron,  wrought  and  un wrought,  manufactures  of  wool, 
coal  and  machinery,  to  show  the  incredible  wastefulness  of 
the  roundabout  system  of  foreign  trade,  for  the  statement 
calls  attention  to  the  fact  that  the  people  of  the  United  States, 
instead  of  directly  receiving  their  coffee  from  Brazil  and 
paying  for  it  with  their  own  products,  actually  import 
coffee  in  British  ships  which  sail  from  Brazil  to  ports  in 
the  United  Kingdom  and  from  thence  to  this  country ;  and 
we  are  also  reminded  that  the  $65,003,562  which  represents 
our  adverse  trade  balance  with  Brazil  is  not  paid  to  the 
people  of  that  country,  but  by  a  circuitous  system  of  ex- 


INTERNATIONAL  FRICTION  127 

change  goes  to  Europe  to  pay  for  products  which  had  their 
origin,  so  far  as  the  raw  material  and  the  food  which  sup- 
pHed  the  energy  to  manufacture  them  are  concerned,  in  this 
country. 

Such  a  trade  as  this  is  economically  indefensible.  No 
matter  what  tributes  may  be  paid  to  the  middleman  and 
the  part  he  plays  in  the  industrial  world,  it  can  never  be 
made  to  appear  that  a  useless  service  performed  by  him 
confers  a  benefit.  The  porter  directed  to  carry  a  pack- 
age to  the  house  of  a  customer  who  lives  in  the  next  block, 
if  he  proceeds  directly  to  his  destination,  may  be  regarded 
as  a  valuable  assistant  to  the  trader,  but  if  he  unnecessarily 
makes  a  detour  which  consumes  his  time  and  energy  it 
will  hardly  be  claimed  that  he  has  added  to  his  value  as 
a  carrier  by  doing  so. 

Nearly  all  roundabout  foreign  trade  closely  resembles 
the  circuitous  operation  of  the  porter  suggested  in  the  above 
similie ;  some  of  it  may  be  performed  with  profit  to  man- 
kind generally,  but  the  most  of  it  has  no  other  recommenda- 
tion than  its  tendency  to  multiply  the  parasites  of  industry. 

Few  people  realize  the  extent  of  this  parasitic  growth 
and  those  who  do  are  afflicted  with  the  singular  hallucina- 
tion that  it  is  a  benefit  rather  than  an  evil.  This  miscon- 
ception is  largely  responsible  for  the  undue  importance  at- 
tached to  external  trade  by  the  Cobdenites,  and  it  has  led 
them  into  many  blunders,  not  the  least  of  which  is  the  curi- 
ous one  that  a  nation  only  profits  by  the  extension  of  its 
foreign  commerce. 

This,  and  the  corelating  free  trade  error  that  it  is  impos- 
sible for  a  protective  country  to  greatly  extend  its  trade, 
will  be  examined  in  the  next  chaper,  in  which  pertinent 
facts  and  illustrations  will  be  furnished  to  buttress  the  claim 
made  by  advanced  protectionists  that  the  really  desirable  for- 
eign trade  is  that  which  contemplates  the  exchange  of  non- 
competing  products,  and  that  the  only  sound  national  sys- 
tem of  economy  is  the  one  which  promotes  a  trade  of  this 
description. 


CHAPTER  VII. 

WASTE  OF  ENERGY. 

THE  DISASTROUS  EFFECTS  OF  UNNECESSARY  EXTERNAL  TRADE. 

The  whole  world  should  be  a  workshop — Protection  does  not  re- 
sult in  the  promotion  of  exotic  industries — Protection  eliminates 
the  element  of  wastefulness  from  external  trade — No  account 
taken  by  economists  of  the  tremendous  waste  of  energy  involved 
in  unnecessary  transportation — Free  trade  violates  the  fundamen- 
tal concept  of  economics  that  energy  should  not  be  unnecessarily 
dissipated — The  "waste  involved  in  the  unnecessary  shipping  of 
coal — The  part  played  in  the  carrying  trade  by  coal — Great 
quantities  of  coal  shipped  to  countries  having  undeveloped  coal 
measures — The  exhaustion  of  the  world's  coal  supply  a  greater 
evil  than  the  destruction  of  forests — The  waste  of  fuel  the 
inevitable  result  of  divorcing  field  and  factory — Protection,  by 
bringing  factory  and  field  together,  reduces  the  waste  of  fuel  to 
a  minimum — The  external  trade  of  the  future  will  give  advan- 
tages to  countries  which  have  not  wasted  their  stores  of  fuel — 
Protection  calculated  to  promote  external  trade  when  a  certain 
stage  of  progress  has  been  reached — Advantages  of  holding  the 
home  market  well  in  hand — American  exports  constantly  in- 
creasing, while  those  of  Great  Britain  remain  stationary — Eng- 
land's excessive  imports. 

A  recent  contributor  to  a  prominent  British  review,  in  an 
article  filled  with  the  old-time  optimistic  views  of  the  Cob- 
denites,  remarked :  "Moreover,  if  free  trade  conquers — and 
its  triumph  is  possibly  nearer  than  we  think — the  artificial 
rivalries  between  nations  resulting  from  the  maintenance  of 
exotic  industries  will  give  place  to  a  system  of  universal 
co-operation ;  the  world  will  become  one  great  workshop, 
each  place  making  and  exporting  what  it  is  best  fitted  by 


•      WASTE  OF  ENERGY  129 

nature  to  produce,  and  finding  its  account  in  the  prosperity 
not  in  the  crushing  out  of  the  industries  of  other  countries."* 

The  observant  reader  will  note  in  this  expression  a  de- 
cided shifting  of  the  point  of  view  of  the  earlier  adherents 
of  the  Manchester  school.  These  latter,  writing  in  1850, 
fancied  that  they  clearly  perceived  that  Great  Britain  was 
destined  to  be  the  world's  workshop,  but  Mr.  Law,  from 
whom  the  quotation  is  taken,  after  studying  the  experiences 
of  a  half  a  century,  reaches  the  conclusion  that  "the  world 
will  become  one  great  workshop." 

The  soundness  of  this  conclusion  is  indisputable,  but  there 
is  ground  for  viewing  with  suspicion  the  further  assump- 
tion, which  is  more  in  the  nature  of  an  implication  than  a 
direct  assertion,  that  the  world  will  be  equally  benefited  by 
a  readjustment  on  the  lines  indicated  by  the  writer.  The 
phrase  "artificial  rivalries  between  nations  resulting  from 
the  maintenance  of  exotic  industries"  suggests  that  Mr. 
Law's  mind  is  still  clouded  v/ith  the  idea  that  acquired  ability 
is  the  exact  equivalent  of  natural  advantage.  Undoubtedly 
he  still  fancies  that  nature  has  fitted  Great  Britain  to  be  a 
better  producer  of  textile  fabrics  than  any  other  country,  and 
that  the  present  lead  of  the  United  Kingdom  in  that  partic- 
ular industry  is  more  due  to  that  cause  than  to  the  skill 
acquired  by  centuries  of  practice. 

In  the  final  analysis  Mr.  Law  will  see  his  mistake  and 
find  that  inexorable  competition  will  permit  no  such  outcome 
as  he  hopes  for.  When  the  world  becomes  one  immense 
workshop,  each  place  making  and  exporting  what  it  is  best 
fitted  by  nature  to  produce,  a  great  revolution  will  have  been 
accomplished.  In  the  process  nations  now  riding  on  the  crest 
of  the  wave  of  prosperity  must  disappear,  or  at  least  have 
their  relative 'importance  changed.  It  w(^uld  1ic  impossi1)le 
to  efifect  such  a  readjustment  without  greatly  disturbing 
existing  conditions. 


*Law,  New  Pleas  for  Old  Remedies,  Westminster,  June,   1896. 
9 


130         PROTECTION   AND   PROGRESS 

Mr.  Law's  error  in  assuming-  that  the  change  will  not 
result  in  the  crushing  out  of  rival  industries  is  due  to  the 
ingrained  Cobdenite  habit  of  assuming  that  everything  al- 
ready established  is  perfectly  natural,  and  that  all  attempts 
on  the  part  of  the  people  of  the  present  day  in  new  or 
undeveloped  countries  to  imitate  the  methods  by  which  the 
existing  industrial  conditions  were  brought  about  must  be 
regarded  as  efforts  to  introduce  the  exotic,  and  that  there- 
fore they  will  fail. 

This  is  a  curious  delusion  which  experience  should  have 
long  since  dissipated.  It  has  been  weakened  somewhat  of 
late  years,  but  it  is  not  Hkely  to  wholly  die  out  until  the 
decadence  of  the  nation  which  gave  it  birth  reaches  a  more 
advanced  stage. 

There  is  enough  evidence  existing,  and  more  is  rapidly 
accumulating,  to  destroy  the  confidence  of  those  who  ad- 
vance this  theory  and  who  have  employed  it  to  strengthen 
the  argument  that  open  ports  have  made  England  supreme 
in  commercial  matters  and  will  enable  her  to  maintain  the 
supremacy  she  has  attained.  Some  of  this  testimony  will 
be  adduced  to  show  that  the  relative  position  of  Great  Brit- 
ain has  greatly  changed  since  1850,  but  in  the  pages  imme- 
diately following  the  effort  of  the  writer  will  be  devoted 
chiefly  to  the  demonstration  of  the  fact  that  protection  in- 
creases the  volume  of  external  trade,  and  that  in  the  future 
this  trade  will  change  its  character  so  materially  that  waste- 
fulness, which  is  now  the  most  pronounced  feature,  will  be 
nearly  eliminated. 

Prefatory  to  this  demonstration,  data  will  be  introduced 
to  show  how  largely  the  energy  of  mankind  is  dissipated  in 
the  performance  of  the  work  of  unnecessary  transportation. 
Mulhall  informs  us  that  "the  actual  traffic  by  rail  and  ship 
(of  the  world)  is  equal  to  5,500,000  tons  daily,  in  the  trans- 
portation of  which  are  employed  4,050,000  men ;  that  is  to 
say,  each  carrier  of  these  two  classes  moves  i|  tons  daily. 
Taking  the  working  year  as  310  days,  the  sum  paid  daily  for 


WASTE  OF  ENERGY  131 

freight,  in  one  or  other  form,  is  £3,800,000  by  193,000,000 
persons  engaged  in  various  industries ;  thus  each  worker 
in  the  human  family  of  the  civiHzed  nations  of  Christendom 
pays  5  pence  a  day  for  freight,  or  one-tenth  of  the  fruits 
of  his  industry. 

"The  number  of  carriers  compared  to  other  workers  is  as 
4  to  90,  and  the  amount  of  capital  employed  in  their  calling 
represents  1 1  per  cent,  of  the  aggregate  wealth  of  mankind. 
*  *  *  The  capital  represented  by  each  hand  employed 
in  carrying  is  nearly  £900;  the  wealth  of  all  the  rest  of  the 
world  divided  among  the  other  workers  ( 193,000,000  hands) 
is  only  £320  each.  The  earnings  of  each  carrier,  as  we  have 
seen  average  £135  a  year;  those  of  the  other  workers  of  the 
world  only  reach  £52  each.  Hence  it  appears  that  the  cariy- 
ing  trade  shows  a  very  high  ratio  of  capital  and  earnings  to 
the  number  of  hands  employed."* 

When  these  statements  are  considered  with  the  attention 
they  deserve  several  important  inferences  will  be  drawn  from 
them,  not  the  least  among  which  is  that  the  importance  of 
transportation  as  a  factor  in  the  human  economy  has  been 
greatly  overrated  because  of  its  artificially  abnormal  de- 
velopment. It  appears,  according  to  the  authority  just 
quoted,  that  the  total  earnings  of  carriers  in  the  western 
world  in  1894  amounted  to  £1,173,000,000.  This  fabulous 
sum,  which  represents  a  tax  of  10  per  cent  on  the  industry 
of  other  workers,  appeals  to  the  imagination  to  such  an 
extent  that  many  of  the  facts  relating  to  these  earnings  are 
obscured.  Economists  of  the  professional  stamp  and  prac- 
tical every-day  men  are  under  the  glamour  of  the  mighty 
result  and  rarely  ask  how  it  is  brought  about. 

So  far  as  the  writer's  knowledge  goes,  no  attempt  has 
ever  been  made  to  determine  what  proportion  of  this  hauling 
to  and  fro  of  products,  raw  and  finished,  is  really  necessary. 
While  special  instances  of  unnecessary  transportation  and 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


132         PROTECTION  AND  PROGRESS 

consequent  waste  of  energy  impress  a  certain  class  of  ob- 
servers, particularly  when  their  interests  are  directly  affected, 
there  is  a  general  disposition  to  assume  that,  as  a  whole,  the 
carrying  facilities  of  mankind  are  employed  beneficially. 

That  this  latter  conclusion  is  unwarranted  is  testified  to — 
unconsciously,  of  course — by  Mulhall,  who  tells  us  "that  40 
per  cent  of  the  working  power  of  the  world  is  used  for 
production,  60  per  cent  for  transport  or  distribution,  which 
latter  is  exactly  the  reverse  of  the  ratios  of  1840."* 

It  may  at  first  be  assumed  that  the  enormous  change  here 
referred  to  has  been  the  chief  instrument  in  promoting  the 
immensely  greater  accumulations  of  wealth  which  the  world 
now  knows,  but  a  little  reflection  will  soon  suggest  that  other 
causes  must  have  produced  that  result,  and  that  transporta- 
tion can  only  be  credited  with  a  share  equal  to  its  real  utility. 

It  is  certainly  a  mistake  to  assume  that  the  carrier's  labor 
contributes  to  the  increase  of  the  world's  wealth  when  he 
takes  the  raw  wool,  filled  with  grease  and  filth  which  increase 
its  weight,  from  the  plains  of  California  to  a  New  England 
town,  where  it  is  cleansed  and  manufactured  into  woolen 
goods  to  be  returned  again  to  California  to  be  consumed 
by  the  populations  in  whose  midst  the  flocks  from  which  the 
original  wool  was  shorn  are  raised. 

During  the  year  1897  the  imports  of  iron  ore  into  Great 
Britain  reached  5,968,680  tons,  a  quantity  representing  an 
output  of  3,000,000  tons  of  pig  iron,  or  the  annual  produce 
of  100  blast  furnaces.f  More  than  5,000,000  tons  of  this 
ore  was  from  Bilboa,  in  Spain.  Turning  to  the  tables  showing 
imports  into  the  latter  country  v/e  find  that  in  1894  metals 
and  the  manufactures  thereof  to  the  amount  of  24,490,107 
pesetas  were  bought  abroad,  principally  in  Great  Britain, 
and  that  the  imports  into  Spain  of  machinery  and  vessels 
in  the  same  year  were  valued  at  31,628,131  pesetas. J     Will 


♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 
fBritish  Board  of  Trade  Returns,   1897. 
^Statesman's  Year  Book,   1897. 


WASTE  OF  ENERGY  133 

any  reasonable  person  assert  that  there  was  an  economic 
gain  in  these  transactions,  or  that  the  shipment  of  raw  cot- 
ton from  the  United  States  to  England  to  be  manufactured 
into  cotton  cloth  and  in  that  shape  returned  to  the  former 
country  did  not  represent  a  waste  of  industrial  energy? 

It  would  be  impossible  to  even  approximately  determine 
the  extent  of  the  waste  of  energy  resulting  from  the  unnec- 
essary moving  of  raw  materials  and  finished  products,  but 
that  it  is  enormous  a  glance  at  some  of  the  leading  features 
of  the  modern  transportation  business  will  disclose. 

The  case  of  Great  Britain  affords  a  concrete  illustration 
of  the  methods  and  magnitude  of  this  wastefulness.  Here 
we  have  a  nation  with  a  population  of  nearly  forty  millions 
crowded  into  a  territory  incapable  of  supporting  more  than 
half  that  number  with  the  products  of  its  own  soil.  Every 
year  this  country  imports  from  other  lands  enormous  quan- 
tities of  food  stuffs.  In  1895  it  was  obHged  to  draw  on 
foreign  lands  for  179,927,450  cwt  of  cereals  and  flour, 
3,758,161  cwt  of  potatoes,  5,431.338  cwt  of  rice,  5>352,930 
cwt  of  bacon  and  ham,  2,458,860  cwt  of  fish,  31,157,275 
cwt  of  raw  and  refined  sugar,  2,825,682  cwt  of  butter, 
940,168  cwt  of  margarine,  2,133,809  cwt  of  cheese,  2,410,- 
532  cwt  of  beef,  856,255  cwt  of  preserved  meats,  2,610,375 
cwt  of  fresh  mutton,  1,065,470  sheep  and  lambs,  415,565 
head  of  cattle,  12,722,292  great  hundreds  of  eggs,  8,214,345 
proof  gallons  of  spirits  for  consumption  and  14,635,568  gal- 
lons of  wine. 

An  examination  of  this  list  reveals  that  it  consists  of 
articles  all  of  which  might  have  been  produced  with  facility 
and  in  profusion  in  such  a  country  as  the  United  States,  and 
when  we  inquire  more  closely  we  find  that  it  was  from  this 
country  that  Great  Britain  derived  by  far  the  largest  pro- 
portion of  the  above  food  supplies.  Pursuing  our  investi- 
gations a  step  further,  we  find  that  Great  Britain  gave  in 
exchange  for  these  products,  or  at  least  that  proportion  of 
them  derived  from  the  United  States,  manufactured  articles, 


134         PROTECTION  AND  PROGRESS 

none  of  which  was  pccuHar  to  Great  Britain  and  all  of  which 
we  are  as  w^ell  able  to  produce  as  the  British.  The  list  of 
our  imports  from  the  United  Kingdom  embraces  manufac- 
tures of  iron  and  steel,  of  copper  and  other  metals;  textile 
fabrics  of  wool,  cotton  and  flax,  and  other  miscellaneous 
articles  wholly  or  partly  manufactured.  There  is  no  doubt 
that  the  list  comprises  many  articles  which  Americans  could 
not  under  existing  conditions  manufacture  as  cheaply  as 
the  British,  but  it  would  be  difficult  to  name  any  which  at 
some  future  time  we  may  not  be  able  to  produce  on  an  in- 
finitely greater  scale  and  thus  be  able  to  sell  at  a  much  lower 
price  than  those  who  now  enjoy  the  trade. 

If  the  correctness  of  these  assumptions  is  admitted,  and 
they  doubtless  Avill  be,  for  it  would  be  difficult  to  success- 
fully dispute  them,  the  only  inference  that  can  be  drawn 
from  them  is  that  the  maintenance  on  English  soil  of  manu- 
factories employed  in  fashioning  articles  for  the  American 
market  involves  an  enormous  waste  of  energy,  and  therefore 
violates  the  fundamental  concept  of  economics  that  produc- 
tion should  be  carried  on,  so  far  as  practicable,  by  the  least 
possible  expenditure  of  human  brain  and  muscle. 

In  the  less  complex  industrial  operations  men  are  careful 
to  avoid  the  blunder  which  free  trade  theorists  extol  when 
they  lay  undue  stress  on  the  value  of  external  trade.  No 
competent  mining  engineer,  for  instance,  would  construct  his 
mill  for  crushing  ores  at  such  a  distance  from  the  mine  from 
whence  they  are  taken,  and  from  the  sources  of  supply  of 
timber  and  water,  that  he  would  be  compelled  to  haul  the 
two  former  and  conduct  the  latter  at  great  expense  to  the 
scene  of  his  operations.  AJl  of  his  ingenuity  would  be  di- 
rected to  bringing  raw  material,  fuel  and  water  as  close 
together  as  possible,  and  any  violation  of  the  obvious  eco- 
nomic demand  that  the  cost  of  operation  be  reduced  as  near 
to  a  minimum  as  possible,  unless  the  mine  were  exceptionally 
rich,  would  result  in  disaster,  and,  under  any  circumstance, 
in  as  much  loss  as  there  was  waste. 


WASTE  OF  ENERGY  135 

The  operations  of  the  whole  world  are  on  a  vast  scale  and 
exceedingly  complex,  but  they  present  all  the  essential  fea- 
tures of  our  illustration.  There  is  no  economic  reason  that 
can  be  advanced  in  favor  of  transporting  raw  cotton  three 
thousand  miles  or  more  to  be  manufactured  into  fabrics, 
when  the  same  fabrics  could  be  manufactured  near  the  fields 
in  which  the  cotton  is  produced. 

At  one  time  it  was  assumed  that  nature  had  particularly 
fitted  Manchester,  in  England,  to  be  the  seat  of  the  cotton 
manufacturing  industry,  but  no  one  holds  to  that  view  at 
present,  least  of  all  Cobdenites,  who  have  been  endeavoring 
to  persuade  American  protectionists  to  throw  down  their 
tariff  barriers  by  extolling  the  efficiency  of  the  operatives  of 
this  country,  the  implication  of  their  argument  being  that 
American  labor  need  not  fear  British  competition  because 
of  its  superior  character. 

There  being  no  ground  for  the  assumption  that  the  Brit- 
ish have  superior  natural  or  acquired  capabilities  as  spinners 
or  weavers  of  cotton  fabrics,  it  is  impossible  to  dispute  the 
fact  that  all  of  the  energy  expended  in  transporting  the  vast 
quantities  of  food  to  feed  the  British  cotton  operatives,  and 
that  similarly  employed  in  the  carriage  of  the  raw  material  to 
Great  Britain,  and  in  the  reshipping  of  the  finished  products 
to  this  country  for  distribution,  is  absolutely  wasted. 

If  this  immense  waste  were  abated,  and  that  involved  in 
the  shipping  of  coal  to  countries  which  have  abundant  un- 
developed supplies  and  to  depots  where  great  quantities  of 
fuel  are  maintained  to  be  consumed  by  ships  in  unnecessarily 
hauling  commodities  to  and  fro,  there  would  be  a  tremendous 
diminution  of  the  trade  known  as  external. 

Few  people  appear  to  be  cognizant  of  the  remarkable  part 
played  by  the  transportation  of  coal  in  swelling  the  world's 
carrying  trade.  In  1896  the  exports  of  British  coal  reached 
44,200,000  tons,  constituting  84.7  per  cent  of  the  quantitative 
volume  of  the  export  business  of  Great  Britain  during  the 
year  named.    The  writer  to  whom  we  are  indebted  for  these 


136         PROTECTION  AND   PROGRESS 

figures  remarks  "that  coal  enters  into  practically  the  whole 
of  our  (British)  exports,  and  probably  forms  the  cargo  of 
over  50  per  cent  of  the  tonnage  cleared  from  the  United 
Kingdom." 

It  would  be  impossible  to  determine  what  proportion  of 
this  vast  traffic  represents  wasted  energy,  but  that  it  is  large 
may  be  easily  determined  by  consulting  the  detailed  accounts 
of  British  exports,  which  show  that  great  quantities  are 
shipped  to  countries  known  to  have  undeveloped  coal  meas- 
ures and  to  other  countries  where  the  product  of  the  United 
Kingdom  for  one  reason  or  another  can  be  sold  in  competi- 
tion with  the  product  of  the  lands  to  which  they  are  shipped. 
The  quantities  shipped  to  depots  for  the  use  of  steamships  in 
the  far  ocean  trade  also  frequently  represent  a  great  eco- 
nomic waste,  being  transported  thousands  of  miles  when 
the  coal  might  be  obtained  close  at  hand. 

In  considering  this  phase  of  the  question  the  fact  must 
be  kept  in  mind  that  the  world's  supplies  of  coal  are  not 
inexhaustible  and  that  future  generations  may  be  greatly 
embarrassed  by  the  reckless  depletion  of  coal  measures  by 
the  people  of  to-day.  There  are  many  writers  who  deplore 
the  wanton  destruction  of  forests  in  new  countries  who  might 
perform  an  infinitely  greater  service  to  mankind  by  pointing 
out  the  unnecessary  waste  of  coal.  The  evils  resulting  from 
the  denudation  of  the  earth  may  be  measurably  remedied  by 
skillful  aforestization,  but  when  the  coal  measures  are  once 
exhausted  nothing  can  replace  them. 

This  being  the  case,  sound  economy  demands  that  the 
waste  of  fuel  incurred  in  the  unnecessary  transportation  of 
raw  materials  and  finished  products  shall  cease,  and  that 
the  supplies  of  coal  in  the  various  countries  of  the  world  be 
conserved,  so  far  as  possible,  for  purposes  of  production 
and  warmth. 

The  Cobdenite  may  swell  with  pride  over  the  expanding 
figures  of  British  external  trade,  but  the  future  generations, 
when  they  come  to  consider  the  fact  that  the  showing  was 


WASTE  OF  ENERGY  137 

made  at  the  expense  of  posterity,  will  hardly  be  inclined  to 
applaud  the  sagacity  of  those  who  viewed  with  equanimity 
the  rapid  depletion  of  the  coal  measures  of  the  United  King- 
dom. 

Those  responsible  for  the  waste  will  have  no  excuse  to 
offer  for  their  blindness.  English  writers  have  pointed  out 
what  must  result  and  have  sounded  warnings.  One  of  them, 
in  a  book  which  stirred  the  country,  has  said :  "Every  ton 
of  coal  extracted  from  our  coal  fields  implies  a  permanent 
loss  of  wealth  to  that  amount.    The  coal  doesn't  grow  again. 

*  *  *  When  you  send  it  away  to  the  foreigner  to  feed 
his  factories,  which  destroy  or  injure  your  factories,  and 
take  in  return  from  him    food    stuffs  and  manufactures 

*  *  *  you  are  letting  your  land  deteriorate ;  your  people 
are  forgetting  in  the  gloom  of  the  coal  mines  how  to  till  the 
soil  and  feed  themselves,  and  are  not  thereby  doing  much 
to  advance  their  health  and  happiness."* 

The  writer  quoted  seems  to  be  chiefly  concerned  with  the 
effects  upon  his  own  country  of  unduly  stimulating  an  ex- 
port trade  the  present  profits  of  which  cannot  be  measured 
against  the  future  disasters  which  may  result  to  Great  Brit- 
ain from  absolute  or  relative  scarcity  of  fuel.  He  sees  clearly 
that  so  far  as  the  United  Kingdom  is  concerned  the  coal 
export  trade  affords  a  striking  analogy  to  the  improvident 
act  of  a  mechanic  who  sells  his  tools  and  squanders  the  pro- 
ceeds, and  by  so  doing  deprives  himself  of  the  opportunity  to 
earn  a  future  living.  Viewed  from  this  standpoint,  external 
trade  in  coal  presents  few  features  for  British  complacency, 
but  when  we  survey  the  matter  in  its  broader  aspects  and 
consider  the  effects  of  the  wasteful  consumption  of  fuel  in 
unnecessarily  transporting  commodities  to  and  fro  the 
fatuity  of  those  who  see  only  the  present  profit  of  the  carry- 
ing trade  seems  appalling. 

The  practical  man  who  lives  in  the  present,  whose  every 

•Williams,  Trade  in  Germany. 


138         PROTECTION   AND   PROGRESS 

act  expresses  the  idea  "after  me  the  deluge,"  may  be  par- 
doned for  extolHng  the  beauties  of  external  traffic  and  in- 
ternal transportation,  dwelling  only  upon  their  magnitude, 
but  the  economist  who  fails  to  take  into  consideration  the 
waste  of  energy  and  wealth  involved  by  pursuing  a  system 
which  separates  field  and  workshop  commits  a  crime,  or  at 
least  stamps  liimself  as  incapable  in  perceiving  and  pointing 
out  in  what  true  economy  exists. 

When  the  extent  and  consequences  of  the  waste  we  have 
described  are  realized  the  mind  reverts  to  the  proper  remedy, 
and  that  is  to  permit  the  natural  growth  of  populations  in 
those  regions  of  the  earth  plentifully  endowed  with  resources. 
This  can  only  be  accomplished  by  overcoming  the  artificial 
advantage  which  capital  and  acquired  skill  have  given  na- 
tions with  established  manufacturing  industries.  The  Cob- 
denistic  sophistry  that  the  world,  like  a  checkerboard,  is 
divided  into  black  and  white  squares,  the  nations  capable  of 
making  finished  articles  representing  the  white  and  those 
fitted  to  be  producers  of  raw  materials  representing  the 
black  squares,  must  be  dismissed,  and  the  fact  that  no  such 
sharp  division  exists  must  be  stared  in  the  face. 

When  Britons  awake  to  a  thorough  realization  of  the  fact 
that  the  whole  world  must  in  the  future  be  a  workshop,  and 
that  some  day  men  will  have  the  wisdom  to  avoid  all  un- 
necessary waste  of  energy,  they  will  understand  the  force 
of  the  protectionist  contention  that  only  that  external  trade 
which  represents  the  exchange  of  non-competing  products 
is  beneficial  to  mankind. 

When  the  world  settles  down  to  trading  of  this  rational 
character  it  will  be  found  that  nations  that  have  resorted  to 
the  protective  policy  have  made  no  mistake.  Then  the  sac- 
rifices made  by  protectionists  with  the  view  of  rendering 
themselves  independent,  so  far  as  practicable,  will  be  re- 
warded by  the  extension  of  that  character  of  trade  so  much 
extolled  by  Cobdenites,  although  it  will  have  eliminated  from 
it  the  greater  part  of  the  wastefulness  described  above. 


WASTE  OF  ENERGY  139 

It  must  be  obvious  that  when  the  period  arrives  in  which 
workshop,  field  and  mine  will  be  brought  into  close  relation 
throughout  the  world  generally  the  countries  producing  raw 
materials  and  food  supplies  in  abundance  will  be  better  situ- 
ated than  those  deficient  in  either  or  both  particulars.  The 
United  States,  for  example,  must  possess  a  great  advantage 
over  England  in  a  competition  for  the  steel  and  iron  trade 
of  those  countries  which  do  not  produce  iron  ores  or  attempt 
to  convert  them  into  finished  products. 

Great  Britain  is  now  compelled  to  import  iron  ores  from 
Spain  and  is  largely  dependent  on  foreign  countries  for  food 
supplies,  while  the  United  States  has  within  its  borders 
illimitable  supplies  of  iron  ores,  carrying  a  higher  percentage 
of  metal  and  capable  of  being  converted  into  pigs  and  finished 
products  more  cheaply  than  those  of  England,  and  at  the 
same  time  raises  the  food  for  the  sustenance  of  her  iron 
workers  at  the  very  doors  of  her  factories. 

These  differing  conditions  suggest  the  inevitable  outcome 
of  a  competitive  contest,  pointing,  as  they  do,  to  the  invasion 
of  markets  now  held  by  Great  Britain  by  the  iron  and  steel 
products  of  this  country. 

Fifty  years  ago  anyone  venturing  to  assume  such  a  possi- 
bility would  have  been  deemed  mad  by  the  adherents  of 
the  Manchester  school,  and  some  of  the  cult,  holding  to  the 
belief  that  it  is  imposible  for  a  great  industry  to  be  developed 
in  a  protective  country,  still  survive  and  obstinately  refuse 
to  accept  the  plainest  evidence.  Pages  might  be  filled  with 
quotations  from  recent  writings  of  Cobdenites  in  which  the 
assertion  is  made  with  more  or  less  positiveness  that  "pro- 
tection does  not  protect,"  and  that  the  industries  called  into 
existence  through  such  a  policy  must  necessarily  be  ephem- 
eral in  character  because  of  their  artificiality.  Men  who 
argue  thus  absolutely  disregard  the  fact  that  the  manufacture 
of  iron  and  steel  in  the  United  States  has  attained  greater 
proportions  than  in  any  other  nation  and  that  the  expan- 
sion of  the  industry  has  resulted  in  a  lowering  of  prices 


I40         PROTECTION   AND   PROGRESS 

which  has  not  only  benefited  the  consuming  population  of 
this  country,  but  that  of  the  whole  world  as  well. 

Those  who  have  satisfied  themselves  by  the  a  priori 
method  that  protection  cannot  accomplish  the  results  above 
outlined  are  inclined  to  cling  tenaciously  to  the  view  formu- 
lated nearly  half  a  century  ago  that  protective  countries 
would  always  find  it  impossible  to  compete  in  outside  markets 
with  a  country  which  freely  opens  its  ports  to  the  commodi- 
ties of  other  nations.  But  the  logic  of  facts  is  rapidly  com- 
pelling them  to  abandon  their  position. 

It  is  impossible  to  seriously  argue  that  a  thing  cannot 
be  done  when  the  whole  world  is  daily  witnessing  the  per- 
formance of  the  alleged  impossibility.  No  matter  how  plaus- 
ible their  theories  may  seem  on  paper,  Cobdenites,  in  the 
face  of  the  constantly  expanding  foreign  trade  of  the  United 
States,  will  be  obliged  to  desist  from  the  ridiculous  assertion 
that  protection  renders  external  trade  impossible.  When  it 
can  be  shown  that  the  exports  of  competitive  articles  from 
this  country  are  increasing  much  more  rapidly  than  similar 
exports  of  Great  Britain  it  is  idle  to  contend  that  protec- 
tion has  the  effect  attributed  to  it  by  writers  of  the  Man- 
chester school. 

Cobdenite  writers  frequently  make  the  blunder  of  assum- 
ing that  the  expansion  of  British  industry  has  never  been 
rivaled.  They  are  misled  by  keeping  their  eyes  fixed  on  the 
statistics  of  other  days.  If  they  would  turn  their  attention  to 
more  recent  figures  of  production  in  this  country  and  Ger- 
many they  would  soon  discover  that  English  industrial 
expansion  has  been  more  than  matched  by  that  of  the 
Americans  and  Germans. 

Elsewhere  due  attention  will  be  devoted  to  this  interest- 
ing phase  of  the  subject ;  here  it  is  only  alluded  to  as  bearing 
on  the  progress  made  in  external  trade  by  protective  coun- 
tries. Our  illustrations  for  the  purpose  will  be  chiefly  drawn 
from  the  United  States,  although  the  showing  made  by 
Germany  is  in  some  particulars  more  striking  than  that  of 


WASTE  OF  ENERGY  141 

this  country,  because  Americans  liave  been  compelled  to  meet 
the  wants  of  a  population  increasing  with  phenomenal  rapid- 
ity owing  to  natural  accretions  and  an  extraordinary  immi- 
gration, and  have  thus  to  a  degree  been  prevented  from 
accumulating  surpluses  for  export. 

Turning  to  a  carefully  prepared  table  compiled  from 
official  data  furnished  by  the  United  States  Statistical  Bureau, 
we  find  that  the  exports  of  manufactured  articles  from  this 
to  foreign  countries  have  been  steadily  increasing  since 
1870.  In  terms  of  percentage  the  principal  of  these  increases 
are  stated  as  follows:  Agricultural  implements,  391  per 
cent ;  builders'  hardware,  258 ;  saws  and  tools,  698 ;  electrical 
supplies,  579;  general  machinery,  934;  jewelry,  1,000;  paints 
and  varnish,  776;  cycles  and  parts  (increase  in  two  years 
since  the  business  of  exporting  them  began),  269;  locomo- 
tives, 843 ;  paper  and  manufactures  of,  547 ;  boots  and 
shoes  of  leather,  547 ;  musical  instruments,  379 ;  clocks  and 
watches,  3,718,  and  manufactures  of  cotton,  482  per  cent. 
Or  the  statement  may  be  made  in  this  way,  that  we  exported 
$9,410,088  worth  of  the  articles  mentioned  in  1870  and  to 
the  value  of  $78,571,930  in  1897.*  Our  export  of  manufac- 
tured articles  in  the  fiscal  year  1896-97  aggregated  $276,- 
357,861.  This  amount  was  26.78  per  cent  of  the  total 
exports.  In  1870  the  proportion  of  manufactured  to  all 
other  classes  of  exports  was  only  15  per  cent  of  a  total 
export  of  $455,208,341  of  all  sorts  of  domestic  productions, 
manufactured  articles  forming  only  $68,279,764  of  the  whole 
amount. 

It  is  hardly  necessary  to  enter  further  into  details.  Those 
already  furnished  clearly  indicate  the  phenomenal  progress 
made  and  show  unmistakably  that  there  is  no  obstacle  to  the 
extension  of  foreign  trade  which  may  not  easily  be  over- 
come by  a  protective  country  with  the  resources  of  the 
United  States. 

*"Foreign  Trade,"  New  York,  January,   1898. 


142         PROTECTION  AND  PROGRESS 

If  what  has  already  been  accompHshed  in  that  direction 
prompts  as  noted  a  free  trader  as  the  Rt.  Hon.  James 
Bryce,  M.  P.,  to  declare  in  a  speech  to  his  constituents,  after 
pointing  out  that  "steel  rails,  electrical  plants  and  bicycles 
were  all  produced  in  the  United  States  enormously  cheaper 
than  in  England,"  that  the  latter  country  had  good  reason 
to  fear  American  competition,*  what  will  happen  when 
American  manufacturing  industries  reach  that  stage  of 
development  in  which  the  saturation  of  the  home  market 
with  surplus  products  compels  manufacturers  to  seek  an 
outlet  for  them  in  foreign  lands? 

The  question  has  in  part  been  answered  by  free  traders 
who  have  studied  the  situation  from  the  practical  point  of 
view,  ignoring  theory  entirely.  J.  Stephen  Jeans,  writing 
on  the  subject  of  "Supremacy  in  the  Iron  Market,"  declares 
unequivocally  that  protection  is  an  advantage  rather  than 
an  obstacle  to  the  expansion  of  external  trade.  He  says: 
"The  economic  policy  of  the  United  States — and  which  is 
often  supposed  to  cramp  and  fetter  invention — did  not  hinder 
a  band  of  brilliant  engineers  and  metallurgists  from  exerting 
themselves  to  improve  upon  British  methods  and  appliances 
until  they  placed  American  practice  far  ahead  of  anything 
in  Europe."!  Having  thus  cleared  the  ground  by  showing 
that  Americans  were  not  hampered  by  protection  in  their 
efforts  to  create  a  great  iron  and  steel  industry,  he  proceeds 
to  make  clear  that  protection  continues  to  operate  advan- 
tageously by  relieving  the  country  of  its  surplus  production. 
This  is  his  contention : 

"Another  essential  difference  in  the  commercial  arrange- 
ments of  continental  industries  as  compared  with  British 
is  founded  on  the  experience  on  the  continent  of  the  system 
of  protection.  The  customs  duties  levied  on  the  imports  into 
Germany,  for  example,  protect  the  German  manufacturer 


*Bryce,  Speech  at  Wolmhampton,  January   lo,   i8 
fjeans,  Engineering  Magazine,  November,   1897. 


WASTE  OF  ENERGY  143 

from  competition  in  his  own  market,  so  that  he  can  always 
depend  upon  securing  within  the  limits  thereby  prescribed 
a  satisfactory  price  from  his  home  customers. 

"This  result,  as  is  proved  by  the  recent  experience  of  the 
United  States,  would  not  necessarily  follow  without  a  certain 
amount  of  organization,  but  the  Germans  are  adepts  in  the 
art  of  accommodating  themselves  to  circumstances,  and  they 
consequently  have  a  whole  legion  of  syndicates  designed  to 
regulate  production  and  price  in  the  different  branches  of 
trade  and  industry.  The  evil  of  overproduction  is  thereby 
kept  in  check  and  prices  are  well  under  control.  The  home 
business,  in  short,  is  made  so  profitable  that  manufacturers 
can  afford,  if  necessary,  to  lose  on  export  orders,  which  they 
often  do  for  the  double  purpose  of  building  up  trade  and 
keeping  their  manufacturing  establishments  and  their  work- 
men fully  employed. 

"There  is  method  in  this  arrangement.  With  production 
on  a  large  scale,  standing  charges  are  kept  down  and  the 
cost  of  manufacture  is  lessened,  while  the  workmen,  having 
full  and  regular  wages,  are  not  likely  to  be  so  difficult  to 
handle  as  they  would  be  if — as  often  happens  in  England — 
they  were  employed  only  to  the  extent  of  one-half  or  two- 
thirds  of  the  full  time. 

"Of  course,  in  so  far  as  Germany,  or  any  other  country, 
sells  in  neutral  markets  at  less  than  cost,  it  is  not  fair  com- 
petition. It  could  be  effectively  met  only  by  the  adoption 
elsewhere  of  a  similar  economic  system,  which,  however, 
cannot  be  looked  for  in  England,  wedded  as  she  is  to  free 
trade,  whatever  consequences  that  system  may  involve."* 

In  these  expressions  of  the  secretary  of  the  British  Iron 
and  Steel  Association  will  be  found  several  texts  for  dis- 
cussion elsewhere,  but  here  we  are  merely  concerned  with 
his  admission  that  instead  of  repressing  external  trade,  as 
has  been  urged   by   the   Cobdenites,   when  the   conditions 

♦Jeans,   Engineering  Magazine,   December,   1897. 


144        PROTECTION  AND   PROGRESS 

become  ripe  for  such  a  result  protection  actually  encourages 
exports  to  foreign  countries.  Mr.  Jeans'  illustration,  quoted 
above,  of  course  applies  equally  to  the  United  States,  or, 
rather,  will  when  the  manufactures  of  this  country  are  devel- 
oped to  such  an  extent  that  the  home  demand  can  be  supplied 
with  ease  and  a  surplus  produced  for  export. 

Although  these  views  of  Mr.  Jeans  were  expressed  several 
months  anterior  to  the  writing  of  this  paragraph,  no  serious 
attempt  has  been  made  to  combat  them.  There  is  frequent 
denunciation  of  trusts  and  syndicates,  and  the  grievous  injus- 
tice they  do  to  consumers  by  resorting  to  the  practices  above 
described  is  protested  against,  but  the  fact  is  not  disputed 
that  protection  stimulates  exports. 

It  is  not  a  question  here  whether  this  stimulus  is  at  the 
expense  of  the  consumer  or  whether  the  workings  of  the 
system  are,  on  the  whole,  injurious  to  the  country;  Mr. 
Jeans'  testimony  is  drawn  upon  merely  to  emphasize  the  con- 
tention that  protection  does  not  hamper  external  trade,  and 
incidentally  to  refute  the  assumption  of  the  Cobdenites, 
voiced  by  Mr.  Bryce  in  the  speech  quoted  from,  that  free 
trade  England  would  have  more  reason  to  fear  the  competi- 
tion of  the  United  States  and  other  protective  countries 
if  they  would  open  their  markets  to  the  unrestricted  entrance 
of  foreign  goods. 

Experience  demonstrates  that  this  assumption  of  Mr. 
Bryce  is  absolutely  erroneous,  and  proves  the'  soundness 
of  Mr.  Jeans'  views  that  the  country  which  holds  its  home 
market  well  in  hand,  all  the  other  conditions  being  equal, 
is  in  better  condition  to  compete  in  the  markets  of  the  world 
than  the  country  which  permits  itself  to  be  made  a  dump- 
ing ground  for  the  surplus  productions  of  other  peoples. 

Passing  from  the  discussion  of  this  phase  of  the  ques- 
tion to  a  comparison  of  the  figures  showing  the  development 
of  the  external  trade  of  a  typical  protectionist  country  and 
those  of  the  leading  free  trade  nation,  we  find  that  the 
expansion  of  the  export  and  import  trade  of  the  United 


WASTE  OF  ENERGY  145 

States,  all  things  considered,  has  been  more  remarkable  than 
that  of  free  trade  Great  Britain.  Referring  again  to  the 
statistics  of  Mr.  Mulhall,  we  find  that  our  imports  amounted 
to  only  i75,(X)0,ooo  in  i860  and  that  thirty-six  years  later, 
in  1896,  they  were  £161,000,000.  Our  exports  in  i860  were 
valued  at  £84,000,000  and  in  1896  they  aggregated  £182,- 
000,000.  The  total  external  trade  for  the  former  year  was 
£159,000,000  and  in  the  latter  year  £343,000,000. 

Had  Mr.  Mulhall  taken  the  measure  of  our  progress 
a  year  later  he  would  have  been  obliged  to  record  a  total 
export  and  import  trade  amounting  to  £368,000,000,  of  which 
£220,000,000  in  round  numbers  consisted  of  exports. 

Our  authority's  tables  are  not  so  arranged  as  to  permit 
an  exact  paralleling  of  these  figures  with  those  showing 
the  expansion  of  British  trade,  but  the  data  is  close  enough 
to  show  that  the  progress  of  the  United  States  in  this  par- 
ticular is  beyond  all  comparison  greater  than  that  of  the 
United  Kingdom.  Taking  1850  as  our  starting  point,  we 
find  that  Great  Britain  in  that  year  exported  to  the  value  of 
£70,000,000,  and  that  her  imports  amounted  to  £99,000,000. 
Thirty  years  later  her  exports  had  increased  to  £286,000,000 
and  imports  to  £411,000,000.  This  represented  a  total  ex- 
ternal trade  in  1850  of  £169,000,000,  and  of  £697,000,000 
in  1880. 

Had  this  rate  of  growth  continued  the  contention  of  the 
Cobdenites  would  have  been  much  stronger  than'  it  is,  but 
when  we  pursue  the  subject  further  we  discover  that  exports 
which  had  reached  £286,000,000  in  1880,  remained  station- 
ary, so  far  as  value  is  concerned,  for  a  period  of  fifteen 
years,  the  amount  being  the  same  in  1895.  During  the  same 
years  the  value  of  imports  rose  from  £411,000,000  to 
£417,000,000. 

Still  adhering  to  Mulhall's  figures,  we  find  that  Ameri- 
can exports,  which  had  reached  £171,000,000  in  1880,  in- 
creased to  £182,000,000  in  1896,  and  that  imports  rose  from 
10 


146         PROTECTION  AND  PROGRESS 

£140,000,000  in  the  first  named  year  to  £161,000,000  in  the 
latter  year. 

Here  again  we  may  remark  that  if  the  EngHsh  statisti- 
cian had  made  his  comparison  one  year  later,  after  the  United 
States  had  recovered  from  a  trade  depression  largely  due 
to  interference  with  the  operations  of  the  protective  tariff, 
the  evidence  favoring  the  contention  that  protection  does  not 
hinder  foreign  trade  would  have  been  still  stronger,  for  the 
records  of  the  fiscal  year  1896-97  show  that  the  export 
trade  of  the  United  States  amounted  to  nearly  £220,000,000 
an  increase  of  £49,000,000  during  the  fifteen  years  in  which 
the  value  of  British  exports  was  nearly  stationary. 

There  are  other  points  which  need  to  be  emphasized 
to  bring  into  relief  the  fact  that  protective  America's  external 
trade  has  developed  as  rapidly  as  that  of  Great  Britain  in 
the  past  and  is  sure  to  surpass  the  record  of  that  country  in 
"this  regard  in  the  future.  The  first  of  these  is  that  the 
:great  gains  of  the  British  were  made  during  the  years  when 
they  enjoyed  a  practical  monopoly  of  outside  markets  be- 
cause of  their  preparedness.  It  was  a  comparatively  easy 
matter  for  the  manufacturers  of  Great  Britain  to  expand 
their  operations  and  find  a  market  for  their  surplus  products 
when  they  were  almost  without  competitors.  But  when 
under  the  stimulus  of  protective  tariffs  great  industries  were 
created  in  Germany  and  the  United  States,  which,  after  fully 
supplying  the  home  demand  of  those  countries,  permitted 
their  surplus  products  to  overflow  into  outside  markets,  the 
situation  at  once  changed,  and  Great  Britain,  no  longer  able 
to  maintain  her  supremacy,  lost  ground  both  relatively  and 
absolutely,  a  result  that  might  have  been  expected,  for  it  is 
an  axiom  in  economics  that  industrial  nations  must  advance ; 
a  stationary  stage  is  always  the  precursor  of  retrogression. 

There  is  another  phase  of  the  question  of  external  trade 
which  may  be  touched  upon  here,  but  will  be  more  fully  dis- 
cussed in  the  chapter  devoted  to  the  development  of  internal 
trades.     The  excessive  imports  of  Great  Britain  and  their 


WASTE  OF  ENERGY  147 

composition  is  referred  to.  It  has  already  been  shown  in 
another  connection  that  the  British  are  largely  dependent 
upon  other  peoples  for  their  supplies  of  raw  materials  and 
foodstuffs.  Obviously  in  instituting  a  comparison  between 
the  external  trades  of  the  United  Kingdom  and  another 
country  not  in  a  state  of  dependence  it  is  absurd  to  extol  as 
an  advantage  a  positive  drawback.  This,  however,  is  con- 
stantly done  by  the  Cobdenites. 

As  we  saw  in  a  preceding  chapter.  Great  Britain  draws 
upon  foreigners  for  food  and  raw  products  to  such  an  extent 
that  her  imports  exceed  her  exports  over  $600,000,000  annu- 
ally. If  her  situation  was  changed ;  if,  like  the  United  States, 
she  were  capable  of  producing  all  the  raw  cotton  consumed 
in  her  factories,  and  could  raise  enough  food  to  supply  the 
millions  who  convert  the  raw  materials  into  finished  fabrics, 
the  tables  of  external  trade  would  tell  a  different  story. 

Eliminate  from  the  table  of  English  imports  the  grain 
and  flour,  the  raw  cotton,  dead  meat,  butter  and  margarine, 
wood  and  timber,  animals,  oils,  seeds,  fruits,  leather,  wine, 
cheese,  copper  and  iron  ore,  lead,  eggs  and  tobacco — all  of 
which  products  we  produce  in  excess  of  our  needs — and  it 
shrinks  considerably ;  to  such  an  extent  indeed  that  the  force 
of  the  argument  based  upon  it,  that  external  trade  is  benefi- 
cial, is  seriously  impaired,  for  the  elision  irresistibly  suggests 
the  dependence  of  Great  Britain  upon  other  countries — a 
source  of  weakness  rather  than  of  strength. 

It  also  brings  into  plain  relief  a  fact  we  have  endeavored 
to  make  clear:  that  the  divorcing  of  field  and  workshop 
was  an  economic  error  which  has  caused  an  enormous  waste 
of  energy  expended  in  unnecessary  transportation.  Cob- 
denism  is  responsible  for  the  world's  persistence  in  this 
economic  mistake  for  several  years  after  experience  had 
demonstrated  the  fallacy  of  the  assumption  that  one  set  of 
people  were  fitted  to  be  the  makers  of  finished  articles  while 
all  others  were  to  be  hewers  of  wood  and  drawers  of  water 
for  those  more  highly  favored  by  Providence. 


CHAPTER  VIII. 

PROTECTION  PROMOTES  ECONOMY. 

WASTE    ELIMINATED    BY    BRINGING    FARM    AND    FACTORY    TO- 
GETHER. 

Evil  results  from  improvident  Yi^aste  of  energy — Limited  character 
of  the  world's  coal  supplies — Energy  conserved  by  bringing  man- 
ufacturer and  consumer  close  together — Effects  of  creation  of 
American  manufacturing  industry — Elimination  of  waste  a  pro- 
nounced feature — Drawbacks  of  dependence  on  foreigners  for 
supplies  of  manufactured  articles — The  penalty  paid  by  the 
American  people — Extortionate  prices  exacted  by  English  rail 
manufacturers — Prices  doubled  in  years  of  active  demand — 
Hundreds  of  millions  lost  by  American^ — No  stability  in  prices 
of  rails  until  American  production  became  a  factor — The  ten- 
dency of  protection  to  disperse  manufactures — It  tends  to  the 
promotion  of  new  seats  of  industry — Inestimable  benefits  con- 
ferred upon  agricultural  classes  by  proximity  of  manufactories — 
The  remarkable  results  achieved  in  the  United  States  by  bring- 
ing farm  and  factory  together. 

In  the  chapter  on  external  trade  stress  was  laid  upon 
the  waste  of  energy  consequent  upon  the  unnecessary  mov- 
ing to  and  fro  of  raw  products  and  finished  articles.  An 
attempt  was  made  to  picture  the  ill  results  to  future  gen- 
erations which  must  flow  from  the  unnecessary  consumption 
of  the  world's  supply  of  coal  by  the  transportation  of  raw 
materials  from  the  place  of  their  origin  to  remote  points, 
there  to  be  fashioned  into  finished  articles  and  thence 
shipped  to  other  countries  and  peoples  capable  of  produc- 
ing similar  articles  for  themselves,  and  even  back  to  the 
peoples  who  had  originally  produced  the  raw  materials. 

The  assumption  that  it  is  an  economic  error  to  unneces- 

148 


ECONOMY  IN  PROTECTION  149 

sarily  divert  from  purposes  of  production  a  fuel  which  can 
never  be  replaced  cannot  be  successfully  disputed.  Unless 
it  is  contended  that  the  science  of  political  economy  should 
only  take  cognizance  of  present  conditions  and  results  and 
leave  the  future  to  take  care  of  itself  its  professors  must 
deprecate  waste.  The  most  extreme  Cobdenite,  while  his 
teachings  may  tend  to  create  the  impression  that  the  gen- 
erations of  today  need  have  no  care  for  those  who  come 
after  them,  will  not  venture  to  directly  express  the  opinion 
that  such  disregard  is  either  defensible  or  advisable.  In- 
deed, the  exponents  of  the  idea  of  laisse:^  faire,  when  con- 
sidering the  subject  abstractly,  invariably  assume  that  the 
tendency  of  a  free  interchange  in  commodities  must  result  in 
permanently  advancing  the  material  welfare  of  mankind. 

It  is  manifestly  the  duty  of  economists  to  point  out  the 
consequences  of  waste.  The  faithful  performance  of  this 
duty  requires  that  emphasis  should  be  laid  on  the  fact  that 
the  teachings  of  the  Cobdenites  if  followed  to  their  logical 
conclusion  will  materially  abridge  the  period  during  which 
life  may  be  maintained  on  the  planet  we  inhabit. 

It  was  recently  pointed  out  by  Lord  Kelvin,  apropos  of 
the  earth's  store  of  fuel,  that  "the  danger  ahead  is  not  that 
the  coal  will  give  out  and  leave  the  world  to  freeze,  but 
that  the  oxygen  which  is  destroyed  along  with  the  consump- 
tion of  fuel  will  all  be  used  up  and  leave  that  helpless  being, 
man,  to  a  fate  no  kinder  than  asphyxiation.  Lord  Kelvin 
emphasized,  therefore,  that  the  best  known  system  of  pro- 
ducing oxygen,  that  of  cultivating  in  a  broad  way  vegeta- 
tion, be  adopted  to  avert  the  great  disaster.""" 

The  suggestion  and  the  proposed  remedy  are  characteris- 
tic specimens  of  the  methods  of  reasoning  adopted  by  the 
adherents  of  the  Manchester  school.  Here  an  evil  is  pointed 
out  which  a  little  inquiry  would  have  developed  is  largely 
aggravated  by  a  false  economic  system,  yet  Lord  Kelvin 

*Cassier's    Magazine,    March    1898. 


ISO         PROTECTION   AND   PROGRESS 

fails  to  ask  whether  it  would  not  be  possible  to-  at  feast 
postpone  the  disastrous  consequences  which  he  predicts 
will  ensue  when  the  earth's  oxygen  is  destroyed.  Instead, 
of  investigating  methods  of  abating  the  waste  he  tacitly 
assumes  that  there  are  none,  and  merely  suggests  that 
man  in  the  future,  by  an  extraordinary  expenditure  of  en- 
ergy and  other  sacrifices,  may  avert  the  results  of  present 
improvidence  sufficiently  to  escape  the  doom  of  asphyxia- 
tion. 

Although  the  peril  here  outlined  has  not  received  the  at- 
tention it  deserves,  economists  rarely  bestowing  much 
thought  upon  it,  usually  contenting  themselves  with  con- 
jectures as  to  the  remote  probable  consequences  and  the 
possibility  of  finding  substitutes  for  coal,  the  desire  which 
impels  peoples  to  resort  to  protective  tariffs,  that  of  secur- 
ing present  gain  and  an  equality  with  other  nations  with 
developed  industries,  is  doing  much  to  postpone  the  dis- 
aster which  must  overtake  the  world  when  its  stores  of  coal 
are  completely  exhausted. 

Protection,  by  bringing  field  and  factory  together,  is  rap- 
idly eliminating  the  waste  of  unnecessary  carriage,  and  in 
the  not  very  remote  future,  when  the  increasing  mobility  of 
capital  shall  cause  it  to  move  more  freely  and  in  a  somewhat 
different  direction  from  that  which  it  has  taken  in  the  past, 
the  saving  of  fuel  and  energy  will  be  greatly  increased, 

A  glance  at  the  condition  of  manufacturing  in  the  United 
States  will  facilitate  the  study  of  this  phase  of  the  question, 
illustrating  as  it  does  in  a  most  significant  manner  the  truth 
of  the  protectionist  assumption  that  true  economy  consists 
in  bringing  producer  and  consumer  as  closely  together  as 
possible.  The  facts  and  figures  which  will  be  cited  when 
properly  interpreted  will  show  that  the  tendency  of  pro- 
tection is  to  disperse  instead  of  concentrating  manufactures, 
and  they  will  also  reveal  that  the  Cobdenite  theory,  that 
it  is  desirable  to  concentrate  in  one  place  all  of  the  manu- 
facturing industries  of  the  world,  was  fallacious,  and  that 


ECONOMY  IN  PROTECTION  151 

had  it  been  accepted  as  sound  it  would  have  miHtated  against 
real  and  permanent  cheapness. 

That  permanent  and  not  immediate  cheapness  should  be 
the  aim  of  statesmen  in  framing  policies  is  an  idea  which 
no  adherent  of  Cobdenism  appears  capable  of  grasping. 
Rogers,  in  all  of  his  discussions  of  the  question,  overlooks 
the  fact  that  temporary  disadvantages  may  be  removed, 
and  characterizes  as  an  economic  blunder  attempts  to  create 
industries  by  artificial  methods.  He  says,  and  his  views 
are  generally  shared  by  free  traders:  "It  will  be  clear 
that  if  any  particular  industry  is  of  such  a  character  as  to 
be  conveniently  carried  out  by  the  inhabitants  of  a  partic- 
ular community  or  district,  if  the  producer  fears  no  rival 
in  the  home  market  and  still  more  if  he  dreads  no  compe- 
tition in  a  foreign  market,  any  protection  aflforded  to  his 
industry  must  be  superfluous."* 

When  we  endeavor  to  ascertain  the  meaning  of  such  a 
statement  as  this  what  do  we  find  it  to  be?  Obviously  that 
there  can  be  no  good  purpose  subserved  by  a  people,  let 
us  say  with  abundant  resources  of  iron,  attempting  to  estab- 
lish a  new  industry  in  competition  with  one  already  estab- 
lished. 

In  the  inception  of  manufacturing  enterprises  the  pro- 
cesses are  always  made  costly  by  lack  of  experience.  The 
beginners  may  borrow  largely  from  the  methods  of  the 
countries  in  which  the  industry  is  already  planted,  but  famil- 
iarity with  processes  is  necessary  to  develop  that  high  de- 
gree of  skill  which  ultimately  results  in  cheapness. 

Clearly,  then,  the  circumstances  could  not  naturally  arise 
which  would  make  it  convenient — using  the  word  in  the 
sense  employed  by  Rogers — for  a  new  country  to  start  an 
industry  in  opposition  to  those  already  established  in  older 
countries.  It  would  always  be  inconvenient  for  one  class 
of  the  community  to  pay  more  for  a  manufactured  article 

*Rogers,    Article   "Free   Trade,"    Ency.    Brit. 


152         PROTECTION   AND   PROGRESS 

to  their  own  countrymen  than  they  would  have  to  pay  for 
a  similar  article  if  brought  from  abroad.  But  no  one  con- 
versant with  the  effects  of  the  creation  of  manufacturing 
industries  in  new  countries  will  now  contend  that  sacrifices 
of  convenience  made  during  the  infancy  of  an  industry  are 
not  abundantly  rewarded  by  after  results. 

Rogers  asserts  that  if  there  is  no  sacrifice  of  convenience 
protection  afforded  to  an  industry  must  be  superfluous. 
This  implies  that  he  regarded  the  industrial  condition  of  the 
world  at  the  time  he  wrote  as  fixed.  He  evidently  believed 
that  the  acquired  capabilities  of  his  own  countrymen  were 
natural  endowments,  and  that  any  effort  on  the  part  of 
other  peoples  to  reach  the  same  degree  of  skill  would  prove 
futile.  We  thus  interpret  him,  because  we  can  hardly  sus- 
pect him  of  sharing  the  views  of  McCulloch  and  Lord 
Brougham  concerning  the  omnipotence  of  capital  and  the 
advantages  derived  from  a  good  start. 

Brougham  and  McCulloch  were  frank  and  admitted  that 
the  object  of  the  policy  they  advocated  was  to  increase  the 
wealth  of  Great  Britain,  but  in  this  place,  at  least,  Rogers 
endeavors  to  inculcate  the  idea  that  mankind  generally  would 
be  benefited  by  remaining  dependent  upon  the  British, 
and  that  it  would  be  an  economic  mistake  to  attempt  to 
create  a  manufacturing  industry  in  a  new  country,  for, 
as  already  shown,  it  would  be  impossible  to  do  so  without 
a  temporary  sacrifice  of  convenience  such  as  the  interpo- 
sition of  the  barrier  of  a  protective  tariff  necessarily  involves. 

Let  us  endeavor  to  discover  by  consulting  the  experience 
of  the  United  States  whether  mankind  has  been  benefited 
or  injured  by  Americans  rejecting  the  advice  of  the  Man- 
chester school  and  deliberately  electing  to  submit  to  the 
inconvenience  of  temporarily  paying  a  higher  price  for  arti- 
cles manufactured  at  home  than  they  would  have  been  called 
upon  to  pay  for  similar  articles  if  imported  from  countries 
in  which  manufactures  were  already  established  and  in  a 
more  or  less  flourishing  condition. 


ECONOMY  IN   PROTECTION  153 

In  making  this  examination  facts  will  be  discovered  which 
bear  out  the  assumption  that  protection  is  an  enormous  con- 
servator of  energy  and  that  it  has  a  constant  tendency  to 
reduce  fuel  waste  to  a  minimum  by  bringing  the  producer 
and  consumer  closely  together.  It  will  also  be  found  that 
the  rejection  of  the  once  plausible  theories  of  Cobden  by 
the  United  States  has,  by  expanding  the  production  of  arti- 
cles of  necessity,  broken  a  practical  monopoly  which  mili- 
tated against  the  world's  progress. 

The  history  of  the  manufacture  best  adapted  to  illustrate 
the  benefits  of  the  protective  policy  is  that  of  iron  and 
steel.  The  reasons  for  its  selection  for  illustrative  pur- 
poses will  be  manifest  from  the  context.  The  early  efforts 
made  to  establish  the  industry  in  this  country  show  that 
those  who  engaged  in  it  were  compelled  to  carry  on  a  con- 
stant struggle  against  the  disadvantages  growing  out  of 
inexperience  and  small  means,  pitted  as  they  were  against 
large  capital  and  the  high  degree  of  acquired  abilities  of 
foreigners. 

In  1840  the  production  of  hardware  in  England  was 
already  a  leading  industry.  The  skill  of  British  artisans 
was  not  matched  by  that  of  any  other  people.  Superiority 
was  acknowledged  on  every  hand,  and  in  this  country  the 
most  amazing  confessions  of  inferiority  were  made  by  tHe 
class  which  later  accepted  as  sound  all  the  doctrines  pro- 
mulgated by  the  Manchester  school. 

It  was  assumed  that  we  could  not  cultivate  the  ability 
to  produce  a  good  quality  of  steel,  and  that  we  should  always 
remain  dependent  upon  the  British  for  supplies  of  that  arti- 
cle. This  pessimistic  mental  attitude  occasionally  gave  way 
to  a  better  feeling  promoted  by  adherents  of  protection,  but 
the  progress  achieved  under  the  stimulus  of  the  ''American 
idea"  was  never  enduring  in  the  period  preceding  the  Civil 
War  owing  to  the  opposition  of  the  slave-holding  class, 
who  realized  that  their  "institution"  could  not  survive  in 


154         PROTECTION  AND  PROGRESS 

the  face  of  the  development  of  a  great  free  manufacturing 
industry  in  this  country. 

Professor  Rogers  noted  this  in  his  contribution  to  the 
Encyclopedia  Britannica,  in  which  he  laid  it  down  as  a 
general  proposition  "that  most  slave-holding  countries  have 
been  indifferent  to  protective  regulations  and  even  unfriendly 
to  them.  This  fact,"  he  adds,  '*is  sufficiently  illustrated 
by  the  contrast  of  opinion  in  the  Northern  and  Southern 
States  of  the  American  Union  before  the  war  of  secession." 

It  was  owing  to  this  difference  of  opinion,  to  this  accep- 
tance of  the  view  that  a  present  inconvenience,  fancied  or 
real,  was  to  be  avoided,  that  the  American  iron  mdustry 
sible  to  avoid  the  conclusion  that  no  matter  how  abijridant 
the  resources  of  a  country  may  be  there  can  be  no  hope  of 
their  being  developed  unless  the  pioneers  are  artificially 
assisted. 

In  1846  the  product  of  pig  iron  in  the  United  States 
was  756,000  tons.  Between  that  year  and  1850  the  out- 
put, owing  to  a  change  in  the  tariff,  decreased  to  564,754 
tons.  During  the  ten  years  between  1850  and  i860,  a  period 
when  our  gold  mines  were  pouring  forth  their  treasures,  the 
industry  made  no  advances  whatever,  the  production  in 
the  last  named  year  being  607,000  tons,  or  nearly  150,000 
tons  less  than  in  the  year  1846. 

It  is  necessary  to  review  facts  such  as  these  to  thoroughly 
realize  the  disadvantages  under  which  the  creators  of  an 
iron  industry  in  this  country  labored  lest  it  be  erroneously 
assumed  that  its  growth  was  a  natural  one.  Such  sweeping 
statements  as  that  made  by  Mulhall  that  "the  production 
of  iron  stone  in  the  United  States  in  1840  was  only  600,000 
tons,  but  it  rose  rapidly  with  the  construction  of  railways, 
reaching  13,300,000  tons  in  1889"*  are  apt  to  prove  mislead- 
ing, suggesting,  as  they  do,  an  uninterrupted  development. 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


ECONOMY  IN  PROTECTION  155 

They  also  tend  to  obscure  the  important  fact,  which  can 
only  be  gathered  by  following  the  progress  of  the  Ameri- 
can iron  industry  year  by  year,  and  its  effects  on  prices, 
that  the  world  is  indebted  to  its  creation  for  the  destruc- 
made  no  real  advances  prior  to  the  Civil  War.  The  experi- 
ence of  the  United  States  during  the  period  makes  it  impos- 
tion  of  the  practical  monopoly  enjoyed  by  the  British  in 
this  branch  of  manufacture.  This  examination  can  be  best 
prosecuted  by  noting  the  changes  in  the  price  of  iron  and 
steel  rails  since  1850  and  inquiring  into  the  causes  produc- 
ing the  violent  fluctuations  recorded. 

In  1850  the  railroad  system  of  the  United  States  was  in 
its  infancy.  Of  the  more  than  180,000  miles  of  line  in 
existence  in  1896  only  a  few  thousand  had  been  constructed 
prior  to  the  opening  of  the  second  half  of  the  nineteenth 
century.  The  discovery  of  gold  in  California  in  1848,  how- 
ever, gave  an  impetus  to  railroad  building,  and  lines  were 
projected  in  all  the  older  States  in  the  Union. 

Those  having  the  enterprises  in  charge  were  evidently  in- 
fluenced by  the  feeling  of  the  time  and  concluded  that  their 
interests  would  be  best  subserved  by  going  abroad  for  their 
supplies  of  rails  and  other  material.  Statesmen  evidently 
shared  their  views,  for,  as  already  noted,  no  serious  effort 
was  made  during  the  period  intervening  between  the  gold 
discoveries  and  the  breaking  out  of  the  Civil  War  to  pro- 
mote the  development  of  iron  manufacturing  on  our  soil. 

The  consequences  of  this  blunder  soon  made  themselves 
felt,  although,  singularly  enough,  they  were  not  recognized 
by  the  men  responsible  for  them,  who  were  wont  to  attrib- 
ute the  resulting  financial  collapses  known  as  panics  to 
overspeculation  rather  than  to  the  failure  to  encourage 
home  industry.  Had  this  course  been  pursued  they  would 
have  avoided  the  mischiefs  which  flowed  from  running  into 
debt  to  the  foreigners  who  dominated  the  world's  money 
markets  and  who  were  never  slow  to  take  advantage  of  the 
difficulties  of  their  debtors. 


156         PROTECTION   AND   PROGRESS 

The  price  of  iron  rails  in  England  in  185 1  was  £9  us  per 
ton.*  As  soon,  however,  as  the  railroad  building  impulse 
began  to  make  itself  felt  in  the  United  States  the  British 
iron  manufacturer,  influenced  by  the  American  and  a  con- 
current demand  for  his  product  in  Great  Britain,  at  once 
advanced  his  prices.  In  1853,  under  the  stimulus  of  the 
demand  which  the  construction  of  2,452  miles  of  road  in 
this  country  during  the  previous  year  had  created,  the  price 
of  rails  was  advanced  in  England  to  £16  2s  per  ton.  Rail- 
road building  in  the  United  States  fell  off  during  the  ensu- 
ing two  years  and  the  British  manufacturer  reduced  his  price 
to  ii3  2s  a  ton. 

In  1856  construction  went  on  at  an  accelerated  pace, 
and  the  price  was  advanced  to  £13  8s.  After  1856  there 
was  a  period  of  comparative  inactivity  in  railroad  construc- 
tion in  the  United  States  owing  to  the  evil  influence  of  the 
low  tariff,  which  left  American  manufacturers  at  the  mercy 
of  their  better  equipped  foreign  rivals.  It  is  noteworthy 
that  during  this  time  of  declining  demand  the  British  prices 
of  rails  sympathized.  In  1856,  when  we  constructed  3,642 
miles  of  road,  rails  cost  £13  8s;  in  1857  the  construction 
was  only  2,487  miles  and  rails  were  £10  8s;  in  1858,  1859 
and  i860  the  constantly  diminishing  rate  of  construction 
was  followed  closely  by  a  declining  Britsh  rail  market,  the 
price  in  the  last  named  year  having  fallen  to  £10. 

During  the  opening  and  first  years  of  our  Civil  War  rail- 
road construction  almost  came  to  a  standstill  in  the  United 
States.  In  1861  only  686  miles  were  built  and  in  1862  834 
miles.  Ceasing  to  be  good  customers  to  the  British,  the  lat- 
ter were  compelled  to  reduce  the  price  of  their  product 
to  £8  17s  in  i86t  and  in  1862  £7  us. 

In   1863,  under  the  stimulus  of  the  war  tariff,  which 


♦Mulhall,  Dictionary  of  Statistics ;  quotations  are  those  of  British 
Iron  and  Steel  Institute. 


ECONOMY  IN  PROTECTION  157 

acted  protectively,  industry  began  to  revive  in  the  United 
Stated.  New  enterprises  were  projected,  among  them  sev- 
eral railroads  requiring  the  construction  of  1,050  miles  of 
line.  Immediately  the  price  of  British  rails  was  advanced  to 
in  a  ton. 

During  1864  and  1865  railroad  activity  continued  in  the 
United  States  and  the  British  kept  advancing  their  prices, 
the  average  being  £13  2s  in  the  latter  year.  In  1866  the 
manufacture  of  rails  was  begun  in  the  United  States,  and 
although  railroad  construction  was  on  a  more  extensive 
scale  than  in  the  previous  year  the  British  manufacturer 
deemed  it  advisable  to  reduce  prices  a  trifle  in  order  to  meet 
the  new  competition,  the  rate  being  ii2  15s  in  that  year. 

Between  1866  and  1870  the  increasing  American  produc- 
tion exerted  an  influence  on  the  British  price  for  rails,  pre- 
venting a  further  increase,  although  construction  continued 
on  an  enlarged  scale,  the  miles  built  being  2,979  ^"  1867, 
4,615  in  1868,  and  6,078  in  1869.  But  the  inability  of  our 
manufacturers  to  keep  pace  with  the  demand  created  by  a 
construction  of  7,379  miles  in  1870  sent  up  the  British  price 
in  that  year  from  £12  2s  to  £13,  from  which  point  it  con- 
tinued to  rise  until  £15  14s  was  reached  in  1872. 

Before  proceeding  further  it  may  be  well  to  emphasize 
the  point  that  so  long  as  the  British  manufacturer  maintained 
practical  control  of  the  market  for  iron  rails  he  acted  strictly 
on  the  Cobdenistic  theory  of  selling  his  wares  as  dearly  as 
possible.  Between  1862  and  1872  the  British  manufacturer, 
under  the  influence  chiefly  of  the  American  demand  for  rails, 
was  enabled  to  more  than  double  his  price.  In  the  first 
named  year  rails  sold  at  an  average  of  £7  lis  a  ton  in  Eng- 
land, and  in  1872  at  £15  14s. 

During  this  interval  many  improvements  were  undoubt- 
edly made  in  the  processes  of  manufacturing,  but  the  con- 
sumer derived  no  benefit  from  them.  On  the  contrary,  owing 
to  the  partial  acceptance  of  the  Cobden  theory  that  mankind 


158         PROTECTION  AND  PROGRESS 

would  profit  by  making  Great  Britain  the  workshop  of  the 
world,  the  consumers  of  England  and  the  rest  of  the  universe 
were  compelled  to  pay  more  than  double  for  their  supplies 
of  iron  than  they  would  have  been  called  upon  to  pay  had  not 
the  aspirations  of  the  early  American  protectionists  been 
checked.  Had  the  iron  manufacturing  industry  in  the  United 
States  not  been  paralyzed  by  the  legislation  of  the  slave- 
holding  class  and  their  sympathizers,  who  believed  that 
because  British  manufacturers  were  at  that  time  able  to 
produce  more  cheaply  than  any  other  people  they  would 
always  be  able  to  do  so,  Cobdenism  would  have  received  its 
coup  de  grace  before  this  time. 

But  the  illusion  regarding  cheapness  was  rapidly  dis- 
sipated after  1872.  About  that  time  it  was  observed  that 
as  the  output  of  our  rolling  mills  increased  the  price  of  iron 
and  steel  rails  began  to  decrease.  In  1872,  when  our  imports 
of  rails  reached  531,537  tons,  the  English  price  was  £15  14s 
a  ton;  with  imports  amounting  to  only  357,631  tons  the  rate 
dropped  to  £13  6s.  In  1874,  owing  to  a  great  decline  in  rail- 
road building,  imports  dwindled  to  148,920  tons  and  the 
price  was  in.  When  we  only  took  42,082  tons,  as  in  1875, 
the  British  cheerfully  accepted  £8  13s  a  ton;  and  in  1878, 
when  we  had  practically  ceased  to  import,  the  price  of  rails 
in  England  was  £6  17s. 

It  would  be  absurd  to  attempt  to  explain  these  advances 
and  recessions  of  prices  by  assuming  that  improvements  of 
processes  were  responsible  for  them.  Such  a  hypothesis 
is  untenable  and  is  absolutely  unsupported  by  evidence.  Nor 
is  it  possible  to  account  for  them  by  showing  the  influence 
of  appreciating  or  depreciating  money  on  prices.  The  quo- 
tations used  are  all  in  gold  terms,  being  derived  from  the 
tables  of  the  British  Iron  and  Steel  Association,  so  there 
are  no  aberrations  of  particular  curren  cies  to  be  allowed  for. 

The  assumption  sometimes  ventUired  that  the  increase 
of  the  general  level  of  prices  betweeai  1850  and  1873  may 


ECONOMY  IN  PROTECTION  159 

account  for  the  changes  cannot  be  considered  for  a  moment, 
as  the  fluctuations  noted  thus  far  were  entirely  within 
the  period  of  rising  prices.  To  make  such  a  hypoth- 
esis tenable  rail  prices  should  have  shown  something  like  a 
steady  advance  toward  the  maximum  and  a  general  corre- 
spondence to  other  prices,  whereas  the  relation  of  rail  to  other 
prices  during  the  years  under  review  was  abnormal,  indi- 
cating unmistakably  the  influence  of  excessive  demand  and 
insufficient  supply. 

The  experience  of  this  country  after  1878  still  more 
strikingly  enforces  the  contention  that  the  creation  of  a 
great  iron  and  steel  industry  in  the  United  States  brought 
about  the  industrial  emancipation  of  the  world,  and  that 
the  American  consumer  has  since  been  well  repaid  for  his 
assumed  sacrifices  during  the  period  while  the  domestic 
manufacture  was  being  created  and  strengthened.  We  say 
assumed,  for  it  has  yet  to  be  shown  that  any  class  of  Ameri- 
cans has  been  called  upon  to  make  a  sacrifice  to  achieve  the 
results  we  are  describing. 

In  1878  the  United  States,  after  suffering  for  several 
years  from  the  effects  of  one  of  the  periodic  trade  depres- 
sions, which  were  the  direct  outcome  of  the  vicious  habit 
of  dependence  upon  foreigners,  began  to  recover,  and  under 
the  influence  of  renewed  prosperity  much  new  railroad  work 
was  projected  and  executed.  In  1877  the  number  of  miles 
constructed  was  2,679;  i"  1878  it  increased  to  4,817;  in  1879 
to  6,712;  in  1880  to  9,847,  and  in  1881  to  11,569.  Although 
our  production  of  rails  steadily  increased  during  the  years 
mentioned,  rising  from  781,818  tons  in  1878  to  1,643,167 
tons  in  1881,  the  quantity  turned  out  was  insufficient  to  meet 
the  demand.  As  a  consequence  our  imports,  which  had 
fallen  to  1 1  tons  in  1878,  were  rapidly  enlarged. 

In  1879  we  again  began  importing,  the  quantity  being 
small  at  first — only  2,611  tons ;  but  our  advent  in  the  English 
market  was  the  signal  for  an  advance  from  £6  17s  to  £8  12s  a 


i6o         PROTECTION   AND   PROGRESS 

ton.  In  1880  we  called  upon  the  British  for  152,791  tons, 
and  the  price  was  increased  to  £10  5s.  In  1881  our  demand 
was  still  larger,  302,304  tons  being  imported,  but  the  influ- 
ence of  American  production  had  now  begun  to  make  itself 
felt  and  the  British  manufacturer  had  to  be  content  in  the 
face  of  an  American  output  of  1,304,191  tons  to  accept  the 
prices  ruling  in  1880.  In  1882  our  independence  was  prac- 
tically achieved  and  our  market  was  no  longer  the  football 
for  British  speculators,  for  that  is  what  the  English  manu- 
facturers of  rails  had  become  during  the  interval  in  which 
they  were  enabled  to  raise  prices  whenever  we  wished  to 
increase  our  railroad  facilities. 

It  is  not  necessary  to  follow  the  fl  ctuations  of  the  iron 
and  steel  rail  market  after  the  year  1882.  Enough  details 
have  been  furnished  to  show  conclusively  that  when  the 
British  controlled  the  situation  they  made  those  dependent 
upon  them  for  supplies  of  railway  material  pay  all  the 
traffic  would  bear.  The  evidence  is  overwhelming  that  when 
Americans  were  not  in  the  market  for  rails  prices  were  low 
and  that  as  soon  as  their  necessities  compelled  them  to  buy 
abroad  prices  were  immediately  raised. 

This  condition  of  affairs  continued,  as  we  have  seen, 
until  the  American  rolling  mills  were  capable  of  meeting 
the  American  home  demand.  After  that  date  fluctuations 
in  the  price  of  British  rails  were  still  noticeable,  but  they 
were  due  to  the  exploitation  of  Argentina  and  other  coun- 
tries. During  the  period  of  railroad  building  in  the  South 
American  republic  referred  to  prices  of  rails  were  advanced 
in  the  English  market  over  £2  a  ton,  while  in  the  United 
States  the  price  had  a  steady  downward  tendency. 

Now  that  we  have  arrived  at  that  stage  in  the  manu- 
facture of  steel  rails  which  indicates  a  reversal  of  the  con- 
ditions described  when  we  were  compelled  to  import  from 
Great  Britain  it  is  proper  to  inquire  what  would  have  been 
the  result  to  the  United  States  and  the  rest  of  the  world  if 
the  protectionist  policy  had  not  prevailed.     The  informa- 


ECONOMY  IN  PROTECTION  i6i 

tion  we  require  is  freely  furnished  by  foreigners.  We  are 
told  by  the  secretary  of  the  British  Iron  and  Steel  Associa- 
tion that  the  American  iron  and  steel  works  are  the  largest 
and  best  equipped  in  the  world,  and  that  they  constitute  a 
menace  to  the  industries  of  the  whole  of  Europe.  Why  they 
occupy  this  position  he  makes  clear  by  pointing  out  that  we 
have  unlimited  quantities  of  ores  and  coal  and  that  we  are 
quick  to  make  use  of  labor-saving  appliances,  while  the  old 
world  adheres  to  practices  which  ought  to  be  obsolete,  but 
which  manufacturers  are  unable  to  get  rid  of  owing  to  the 
conservatism  of  the  trades  unions.  But  he  lays  the  most 
stress  on  the  development  of  new  bodies  of  ore.  Writing 
in  December,  1897,  he  said : 

"Perhaps,  however,  the  more  immediate  cause  of  the  in- 
dustrial movement  (in  the  United  States)  which  has  now 
alarmed  Europe  so  seriously  is  the  recent  development  of  the 
new  ore  deposits  in  the  Lake  Superior  region,  which  has 
placed  at  the  disposal  of  certain  manufacturers  raw  materials 
of  exceptional  richness  at  a  price  that  would  not  have  been 
deemed  possible  only  five  years  ago.  Although  I  shall  return 
to  this  subject,  I  may  here  remark  that  according  to  the 
American  census  of  1880  the  average  spot  value  of  all  the 
ores  mined  in  the  United  States  in  that  year  was  12  shillings 
a  ton,  and  the  average  of  Lake  Superior  ores  was  13s  y^d 
per  ton.  A  dollar  and  a  half  more,  or  say  6  shillings  per  ton, 
would  be  required  to  place  these  materials  alongside  furnaces 
in  the  Pittsburg  district,  so  that  the  average  cost  of  a  ton 
of  Lake  Superior  ore  at  the  furnace  in  Pittsburg  would  not 
be  less  than  19  shillings  per  ton,  and  the  average  cost  of  the 
single  item  of  or^s,  per  ton  of  iron  produced,  would  be  almost 
as  much  as  the  total  cost  of  producing  a  ton  of  Bessemer  pig 
iron  in  the  same  district,  according  to  the  most  recent 
figures.  This  cost  is  now  considerably  under  the  average 
of  the  European,  including  the  British,  iron  making  centers, 
producing  the  same  description  of  iron."* 

♦Jeans,    Engineering    Magazine,     November,     1897,     Article,     "Su- 
premacy in  Iron   Market." 
11 


i62         PROTECTION   AND   PROGRESS 

Having  this  explanation  before  us,  we  need  not  be  sur- 
prised at  the  additional  statement  of  the  writer  that  "Great 
Britain  is  now  importing  American  pig  iron,  American  steel 
rails,  American  wire,  American  agricultural  machinery, 
American  machine  tools  and  mnay  other  American  prod- 
ucts."* Nor  will  anyone  capable  of  reasoning  from  cause  to 
effect  undertake  to  deny  that  the  changed  condition  is  wholly 
due  to  the  fact  that  Americans  were  willing  to  accept  the 
consequence  of  a  temporary  enhancement  of  the  prices  of 
the  products  here  discussed  in  order  to  secure  the  benefits  of 
future  cheapness.  ' 

It  will  not  be  charged  that  this  result  was  unexpected 
by  American  protectionists,  because  their  writings  are  filled 
with  predictions  that  their  policy  would  have  such  an  out- 
come. Adherents  of  the  Manchester  school  frequently  in- 
dulge in  criticism  of  the  objects  of  protection  and  protec- 
tionists, but  when  their  comments  are  compared  with  what 
protectionists  have  really  said  it  will  be  found  that  they  are 
attacking  ideas  falsely  attributed  by  them  to  the  advocates  of 
a  protective  tariff,  and  not  utterances  of  those  who  may 
justly  be  regarded  as  true  exponents  of  the  system.  These 
latter  have  always  maintained  that  the  multiplication  of  in- 
dustries throughout  the  world  would  redound  to  the  benefit 
of  mankind,  and  their  chief  objection  to  the  policy  of  Cob- 
denism  was  that  the  prevention  of  the  development  of  the 
world's  resources  would  create  a  practical  monopoly  which 
would  result  in  permanent  dearness. 

There  is  no  doubt  that  this  theory  is  sound.  The  ex- 
traordinary changes  effected  by  the  entrance  of  great  protec- 
tionist nations  into  the  world's  markets  clearly  establish 
this.  The  relatively  slow  development  of  the  iron  industry 
which  marked  the  period  preceding  the  rejection  of  Cob- 


*  Jeans,    Engineering    Magazine,    November,     1897,    Article,     "Su- 
premacy  in   Iron   Market." 


ECONOMY  IN  PROTECTION  163 

denism  by  the  people  of  the  United  States  must  have  con- 
tinued for  a  long  time  had  this  country  and  Germany 
neglected  to  make  the  best  of  their  resources.  It  has  only 
been  since  immense  iron  and  steel  plants  were  created  in  the 
United  States  and  Germany  that  the  world's  consumption 
of  those  metals  has  shown  a  marked  tendency  to  increase, 
and  the  price  lists  of  the  two  periods — that  during  which 
England  held  the  market  and  that  since  competition  in  pro- 
tective countries  became  effective — tell  why  the  promises  of 
cheapness  made  by  the  free  traders  would  have  to  come  to 
naught  had  Great  Britain  been  able  to  maintain  her  suprem- 
acy in  this  and  other  lines  of  manufacturing  industry. 

It  will  assist  us  to  understand  what  might  have  happened 
if  American  competition  had  not  been  promoted  by  protection 
if  we  note  that  Great  Britain  now  finds  it  necessary  to  import 
from  Spain  over  5,000,000  tons  of  iron  ore  annually  to  main- 
tain her  present  rate  of  pig  iron  production.  There  is  but  one 
construction  that  can  be  fairly  placed  upon  this  action  of 
resorting  to  a  foreign  country  for  the  supply  of  a  raw  ma- 
terial, the  abundance  of  the  domestic  supply  of  which  in  the 
early  decades  of  the  nineteenth  century  was  supposed  to 
assure  British  supremacy,  and  that  is  that  the  cost  of  produc- 
ing ores  has  become  so  great  in  the  United  Kingdom  that 
many  of  the  mines  of  that  country  can  no  longer  be  worked 
as  profitably  as  formerly. 

If  the  depletion  of  the  British  supply  has  been  thus 
rapid,  even  in  the  face  of  the  diminished  demand  for  English 
iron  brought  about  by  the  creation  of  great  iron  manufac- 
turing industries  in  such  protectionist  countries  as  the  United 
States  and  Germany,  what  would  have  been  the  result  had 
the  world  continued  to  depend  as  largely  upon  Great  Britain 
for  its  supplies  of  manufactures  of  iron  as  it  did  during  the 
decade  between  1840  and  1850? 

To  realize  the  full  import  of  this  inquiry  we  must  turn 
to  the  figures  showing  the  relative  production  of  iron  in 


i64         PROTECTION   AND   PROGRESS 

1840  of  the  western  nations  of  the  world  and  compare  them 
with  those  of  a  more  recent  date.  For  convenience,  and  in 
order  to  adhere  to  free  trade  authorities  as  closely  as  possi- 
ble, the  statistics  of  Mulhall  are  still  resorted  to.  His  tables 
show  that  the  total  product  of  pig  iron  in  1840  was  2,680,000 
tons,  of  which  quantity  Great  Britain  produced  more  than 
one-half,  her  output  being  1,390,000  tons.  In  the  same  year 
the  product  of  the  United  States  was  290,000  tons,  that  of 
Germany  170,000,  and  the  remaining  nations  are  credited 
with  having  produced  830,000  tons. 

At  this  time  there  was  no  question  about  the  supremacy  of 
the  British  in  this  field  of  manufacture.  No  people  on  the 
globe  could  produce  iron  in  competition  with  Great  Britain 
or  fashion  articles  from  that  product  so  cheaply  as  the 
English.  The  disparity  in  the  performances  of  the  people 
of  Great  Britain  and  those  of  other  countries  was  so  great 
that  it  gave  birth  to  the  belief,  since  proved  fallacious,  that 
nature  had  endowed  the  British  with  such  resources  of  coal 
and  iron  and  with  a  skill  to  work  them  surpassing  that  of  the 
workmen  of  other  nations.  That  belief,  as  we  have  already 
shown,  was  for  many  years  accepted  even  by  peoples  whose 
interests  were  subsequently  advanced  by  rejecting  it,  but 
who,  if  the  teachings  of  theorists  rather  than  the  promptings 
of  common  sense  had  been  followed  by  them,  might  still  be 
dependent  upon  Great  Britain  for  their  supplies  of  iron. 

What  the  consequences  to  the  world  might  have  been  had 
Americans  and  others  not  proved  incredulous  may  be  in- 
ferred from  a  comparison  of  the  figures  of  production  of  iron 
in  1840  and  1893,  fifty-four  years  after  the  date  when  Brit- 
ish supremacy  was  universally  acknowledged.  In  1893  the 
world's  output  of  iron  was  reckoned  at  26,oio,oootons,  or  ten- 
fold the  quantity  produced  in  1840.  During  the  period  Great 
Britain  made  much  progress,  but  it  would  be  irrational  to  as- 
sume that  she  would  have  reached  the  rate  of  production  she 
has  since  attained  without  the  stimulus  of  the  rivalry  created 


ECONOMY  IN  PROTECTION  165 

by  the  protection  policy.  But  for  purposes  of  argument  we 
may  admit  that  her  rate  of  production  might  have  been 
maintained.  If  we  do  we  shall  have  to  ask  what  would  have 
been  the  result  if  the  United  Kingdom  had  increased  the 
output  from  her  mines  to  such  an  extent  that  she  would  be 
able  to  supply  a  quantity  of  iron  equal  to  one-half  of  the 
world's  demand  of  today  as  she  did  in  1840? 

The  obvious  answer  is  that  the  depletion  of  England's 
mines  at  such  a  rate  would  have  so  diminished  her  stores  of 
ores  that  they  could  only  have  been  mined  at  a  constantly 
increasing  cost.  If  the  demand  of  the  rest  of  the  world  for 
British  iron  amounted  to  over  13,000,000  tons  yearly  it 
could  only  be  met  by  a  sacrifice,  which  producer  and 
consumer  would  have  to  make  jointly,  the  former  by  bring- 
ing his  country  nearer  to  the  verge  of  dependence  upon  for- 
eigners for  this  absolutely  essential  raw  material  and  the 
latter  by  being  compelled  to  pay  a  constantly  increasing  price 
for  such  iron  as  he  desired  to  use. 

Nor  would  these  be  the  only  evils.  Had  Great  Britain 
been  permitted  to  denude  herself  of  her  iron  ores  for  the 
purpose  of  supplying  the  rest  of  the  world  with  manufac- 
tures of  iron  at  such  a  rate  as  would  have  been  necessary  to 
keep  pace  with  the  modern  increase  of  consumption,  there 
would  have  been  an  accompanying  depletion  of  her  supplies 
of  coal,  which  would  have  been  encroached  upon  to  smelt 
the  raw  material  and  to  provide  the  power  to  fashion  the 
same  into  finished  articles.  Additional  demands  would  have 
been  made  upon  her  fuel  supplies  to  provide  the  ships  carry- 
ing the  manufactured  articles  to  different  parts  of  the  globe, 
and  there  would  be  added  to  this  improvidence  the  waste  of 
manual  energy  implied  in  transporting  such  products  to 
countries  fully  competent  to  provide  themselves  with  iron 
and  articles  manufactured  therefrom. 

Obviously  this  process  of  denudation  of  the  supplies  of 
the  raw  material  iron  and  of  the  coal  of  Great  Britain  must 


i66         PROTECTION   AND   PROGRESS 

have  proceeded  until  her  exhaustion  was  nearly  complete  if 
the  world  had  implicitly  accepted  the  teachings  of  Cobden- 
ism,  for  every  added  year  of  experience  must  have  more 
thoroughly  intrenched  the  British  manufacturer  and  made 
the  task  of  rivaling  him  more  and  more  hopeless.  Then 
when  the  time  arrived  that  the  iron  ores  of  the  United 
Kingdom  could  no  longer  be  worked  the  British  manu- 
facturer would  have  resorted  to  other  countries  for  his 
supplies  of  iron  and  fuel.  This  would,  of  course,  have 
accelerated  the  process  of  wastefulness,  for  whereas  while 
Great  Britain  was  well  provided  with  iron  ores  and  coal  she 
merely  wasted  fuel  and  energy  in  shipping  finished  articles 
to  foreign  countries,  under  the  new  conditions  she  would 
have  been  compelled  to  uselessly  expend  tremendous  quan- 
tities of  fuel  and  energy  in  bringing  to  Great  Britain  the 
raw  materials  necessary  to  continue  her  iron  and  steel 
manufacturing  industry. 

It  may  be  argued  that  sane  men  would  not  proceed  so 
irrationally  for  any  great  length  of  time  and  that  true 
economy  would  compel  the  adoption  of  a  remedy  long  before 
the  disease  had  become  fatal.  But  there  is  no  ground  for 
such  an  assumption.  That  relief  might  be  obtained  by 
abandonment  of  the  system  of  wastefulness  is  nowhere 
suggested  in  any  of  the  writings  of  the  followers  of  Cobden. 
On  the  contrary,  the  teachings  of  the  Manchester  school  all 
tend  to  the  formation  of  the  opinion  that  man  is  in  some 
way  benefited  by  useless  work. 

When  wasteful  politicians,  in  order  to  provide  followers 
with  employment,  project  unnecessary  enterprises  a  great 
clamor  arises,  but  no  free  trader  lifts  his  voice  in  deprecation 
of  the  superfluous  expenditure  of  energy  involved  in  the 
deportation  of  raw  materials  and  food  stuffs  from  countries 
in  which  they  could  be  worked  up  and  consumed  with  as 
much  profit  as  in  the  lands  to  which  they  are  carried.  It 
will  be  admitted,  however,  that  the  consequences  of  the 


ECONOMY  IN   PROTECTION  167 

first  named  evil  are  infinitesimal  by  comparison  with  the 
latter. 

Instead  of  pointing  out  the  waste  resulting  from  this 
course  and  deploring  it  economists  of  the  Cobden  type  ad- 
miringly cite  the  enormous  earnings  of  the  carrying  trade 
and  indulge  in  platitudes  about  the  advantages  derived  from 
free  intercourse  betvi^een  nations.  It  is  as  though  an  econo- 
mist should  applaud  as  a  great  achievement  the  trundling 
back  and  forth  of  the  same  load  of  bricks,  a  task  which  the 
Philadelphia  millionaire  Girard  is  said  to  have  imposed  upon 
an  apphcant  for  charity,  a  job  which  the  self-respecting 
pauper  refused  to  perform  on  the  ground  that  he  would  be 
working  to  no  purpose. 

It  may  be  safely  concluded  that  if  Cobdenism  had  flour- 
ished the  blunder  of  separating  field  from  factory  would  have 
continued  indefinitely,  but  the  depletion  of  Great  Britain's 
resources  of  iron  and  fuel  would  not  have  proceeded  at  any 
such  rate  as  that  suggested  in  the  foregoing  illustration.  On 
the  contrary,  it  may  reasonably  be  assumed  that  the  effect  of 
the  system  would  have  been  more  in  the  direction  of  repres- 
sion of  consumption  than  expansion.  The  lesson  taught  by  the 
experience  of  the  United  States  in  railroad  building  is  that 
while  Great  Britain  retained  practical  control  of  the  world's 
iron  and  steel  industry  the  tendency  to  meet  an  increasing  de- 
mand with  rising  prices  was  always  present,  and  that  its 
effect  was  to  greatly  restrict  consumption.  The  painfully 
slow  growth  of  consumption  in  the  United  States  during  the 
years  previous  to  the  expansion  of  the  home  iron  and  steel 
industry  furnishes  irrefragible  proof  that  this  country,  at 
least,  was  a  great  sufferer  from  the  evil  effects  of  long 
distance  transportation  of  things  which  might  have  been 
produced  within  our  own  borders. 

When  we  turn  to  the  records  which  tell  the  story  of  the 
growth  of  a  general  manufacturing  industry  in  the  United 
States  we  find  abundant  further  confirmation  of  the  doctrine 


i68         PROTECTION   AND   PROGRESS 

that  bringing  producer  and  consumer  closely  together  re- 
sults in  great  saving.  There  is  no  disposition  to  assert 
that  protection  entirely  eradicates  the  economic  evil  of  waste 
of  energy  and  fuel  heretofore  dwelt  upon,  but  the  proof  is 
overwhelming  that  it  mitigates  it  enormously. 

There  is  primarily  to  be  placed  to  the  credit  of  protec- 
tion the  saving  effected  by  dispensing  with  the  unnecessary 
carriage  of  such  raw  materials  as  cotton  to  the  other  side  of 
the  Atlantic  to  be  fashioned  into  articles  for  wear  in  this 
country,  and  of  the  additional  food  supplies  which  would  be 
required  by  foreign  operatives  if  they  were  permitted  to 
enjoy  the  monopoly  of  providing  manufactured  articles  for 
the  inhabitants  of  new  countries.  How  great  an  economy 
this  is  can  only  be  determined  by  reckoning  what  it  would 
have  cost  the  United  States  for  transportation  if  its  growing 
population  had  continued  dependent  upon  Europe  for  sup- 
plies of  manufactured  articles.  As  it  is,  with  an  external 
trade  which  approximates  the  rational,  millions  are  unneces-. 
sarily  expended  every  year  and  fabulous  quantities  of  coal 
are  uselessly  consumed  in  the  unnecessary  hauling  to  and 
fro  of  commodities. 

While  protection  does  not  completely  eliminate  waste, 
its  tendencies  are  always  in  that  direction.  It  has  been 
noted  by  Mulhall  that  "more  than  three-fourths  of  the 
world's  steam  power  is  employed  for  traction  purposes  on 
railways  and  in  steamboats,"  and  that  in  the  United  States 
"the  average  energy  is  1,940  foot  tons  daily  per  inhabitant, 
which  is  more  than  double  the  European  average."*  This 
undoubtedly  embraces  an  enormous  proportion  of  waste,  but 
the  same  author,  in  his  analysis  of  the  census  of  1890, 
shows  how  rapidly  the  factor  of  misdirected  energy  is  being 
diminished. 

On  this  point  he  says :    "The  rapid  growth  of  population 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


ECONOMY  IN  PROTECTION  169 

has  caused  a  shifting  of  equiHbrium  in  the  occupations  of  the 
people  (of  the  United  States).  Thus  in  1850  the  Prairie 
States  had  only  one  factory  operative  to  seven  farming 
hands,  whereas  in  1890  the  figures  stand  relatively  as  five  to 
eleven.  The  census  returns  of  manufactures  in  1850  and 
1890  showed  thus: 

No.  of  Operatives.               Million  dollars.  Per  operative,  Dollar 

Wages.  Product.  Wages.  Product. 

1850             111,000                     30            147  270            1324 

1890          1,407,000                     672          3161  478            2247 

To  this  Mulhall  adds :  "In  1890  the  Prairie  States  pro- 
duced 34,000,000  tons  of  coal,  chiefly  from  Illinois  and  Ohio, 
and  8,000,000  tons  of  iron  ore,  mostly  from  Michigan,"  and 
that  the  total  mining  output  was  valued  at  $183,000,000.* 

Although  our  authority  emphasizes  the  statement  that 
"food  and  lumber  constitute  the  principal  manufactures  of 
the  Prairie  States,"  and  refers  to  the  fact  that  "the  produc- 
tion of  hardware  is  not  quite  sufficient  for  their  requirements, 
and  that  of  textiles  so  small  that  they  are  obtained  almost 
wholly  from  New  England,"  the  fact  is  not  obscured  that  a 
great  revolution  has  been  effected  by  the  introduction  of 
manufactures  into  a  region  a  thousand  miles  or  more  from 
the  Atlantic  seaboard,  and  of  course  that  much  further  from 
what  would  have  been  the  source  of  supply  for  millions  of 
Americans  had  the  Cobden  idea  of  making  England  the 
world's  workshop  prevailed. 

In  the  center  of  the  region  embracing  the  Prairie  States 
are  now  situated  some  of  the  largest  and  most  completely 
equipped  rolling  mills  in  the  world,  and  at  their  very  doors 
are  illimitable  supplies  of  fuel  and  mines  of  iron  ores  surpass- 
ing in  richness  those  of  any  country  on  the  globe.  Is  it 
possible  to  assume  that  the  failure  to  develop  these  vast 

*Mulhall,    Progress   of   United  States,      North    American     Review, 
August,  1897. 


lyo        PROTECTION   AND  PROGRESS 

industries  by  the  side,  or  rather  in  the  midst,  of  the  fertile 
agricultural  region  comprised  in  the  Prairie  States  would 
have  inured  to  the  benefit  of  the  American  people  and 
the  rest  of  mankind  ?  No  one  would  now  venture  to  answer 
this  question  in  the  affirmative,  but  not  many  years  ago  the 
farmers  of  the  Prairie  States,  who  are  now  benefiting  by  the 
proximity  of  great  workshops,  were  told  by  Cobdenites  that 
their  best  interests  would  be  subserved  by  sending  their 
products  four  thousand  miles  to  feed  workingmen  engaged 
in  fashioning  articles  which  are  now  made  at  their  doors. 

The  experience  of  the  Prairie  States  is  by  no  means 
unique.  The  South  also  affords  an  illustration  of  the  ten- 
dency of  protection  to  obviate  the  waste  of  fuel  and  energy 
due  to  unnecessary  transportation.  A  great  iron  industry 
has  recently  been  created  in  that  region,  the  productions 
of  which  rival  those  of  other  sections  of  the  Union.  The 
iron  of  Alabama  is  already  finding  its  way  in  the  form  of 
steel  rails  and  other  advanced  forms  to  foreign  countries, 
although  the  major  part  of  it  is  consumed  in  the  territory 
adjacent  to  the  rich  deposits  of  ores  and  coal. 

Contemporaneously  with  the  development  of  the  South- 
ern iron  industry  there  has  been  an  expansion  of  the  business 
of  cotton  spinning  and  weaving  in  many  of  the  States  which 
were  once  wedded  to  the  idea  that  the  true  interests  of  the 
planter  of  the  South  required  that  the  raw  cotton  should 
be  shipped  to  England,  there  to  be  converted  into  fabrics 
suitable  for  consumption  in  the  cotton  growing  belt.  Now 
that  factories  are  multiplying  throughout  the  region  once 
noted  for  the  poverty  of  its  resources,  industry  is  becoming 
diversified  and  the  Southern  States  are  actually  becoming 
self-dependent. 

These  developments,  which  have  been  made  possible 
through  the  adoption  of  a  protective  system  by  the  United 
States,  might  not  have  taken  place  for  centuries  to  come, 
perhaps  they  never  could  have  occurred,  had  Cobdenism 


ECONOMY  IN  PROTECTION  171 

prevailed.  An  English  economist  who  has  given  the  ques- 
tion of  the  transference  of  capital  much  study  and  who 
has  pointed  out  how  difficult  it  is,  even  within  the  limits  of 
a  nation  where  the  conditions  of  taxation,  mode  of  living 
and  other  things  are  nearly  alike,  to  move  an  established  in- 
dustry to  a  part  of  the  country  more  favorably  situated 
naturally,  expresses  the  view  that  infinitely  more  difficulty 
attends  their  transference  from  one  country  to  another.*  He 
implies  that  the  natural  advantages  of  foreign  countries, 
even  when  their  exploitation  is  encouraged  by  bounties  and 
other  artificial  means,  are  not  nearly  so  attractive  as  the 
immediate  benefits  derived  from  an  established  position  in  an 
already  developed  country.  He  points  out  that  while  "capital 
and  labor  may  gradually  be  exported,"  and  an  "industry  may 
pine  and  dwindle  away  under  adverse  conditions,  the  result 
being  that  at  the  end  of  a  certain  period  there  will  be 
within  the  country  less  labor  and  capital,  and  possibly  also 
less  consuming  power  per  unit  of  population"  than  formerly, 
there  is  a  constant  struggle  against  the  inevitable  which  has 
a  tendency  to  keep  alive  unprofitable  industries  long  after 
the  hopelessness  of  the  contest  is  recognized. 

If  this  is  the  case,  and  our  experience  teaches  us  that  it 
is,  it  is  only  rational  to  assume  that  the  advantages  of  accum- 
ulated capital  and  acquired  abilities  in  old  countries  where 
industries  are  well  established  are  so  great  that  it  would  be 
impossible  for  a  new  country  to  develop  its  resources  in  the 
face  of  unrestricted  competition.  Therefore,  true  economy, 
that  which  considers  the  future  as  well  as  the  present,  de- 
mands that  means  be  adopted  by  new  countries  to  nullify 
the  artificial  advantages  enjoyed  by  older  nations  so  that 
there  may  be  something  like  a  uniform  development  of  the 
world's  resources,  and  not  a  one-sided  one  which  would 


*Mulhall,    Progress    of    United    States,    North    American    Review, 
August,  Nicholson,  Principles  of  Political  Economy,  Vol.  ii,  p.  71. 


172         PROTECTION  AND  PROGRESS 

permanently  impose  upon  mankind  the  present  wasteful 
system  which  involves  the  unnecessary  carrying  to  and  fro 
of  materials  and  the  speedy  destruction  of  the  world's  great 
source  of  energy  and  heat. 


CHAPTER  IX. 

INTERNAL  TRADE. 

OVERSHADOWING  IMPORTANCE  OF  DOMESTIC  PRODUCTION  AND 
EXCHANGE. 

Protection  promotes  the  filling  of  the  national  industrial  reservoir — 
Effects  of  the  creation  of  domestic  industries — The  main  object 
of  all  exertion  is  the  meeting  of  domestic  needs — Internal  trade 
of  prime  importance — External  trade  analogous  to  the  waste 
that  escapes  from  a  reservoir — England's  home  market  twice 
as  great  as  her  foreign  trade — Why  England's  imports  are 
larger  than  those  of  the  United  States — Dependent  and  inde- 
pendent countries — Free  trade  policy  requires  artificial  backing 
— The  American  home  market — Imports  of  the  United  States 
small  because  we  do  not  need  to  draw  upon  foreigners — What 
would  have  happened  had  the  colonies  taken  Adam  Smith's 
advice — Purposes  of  the  British — Mercantile  system  really  the 
present  British  commercial  system — Effects  of  colonial  depend- 
ence— Poverty  in  the  days  before  the  United  States  had  a  diver- 
sified industry — The  struggle  for  American  liberty  a  struggle 
for  commercial  independence — Rapid  filling  of  the  industrial 
reservoir  after  i860 — Wealth  created  in  the  United  States  more 
rapidly  than  elsewhere. 

In  discussing  the  singular  hallucination  of  the  free  trade 
theorists  that  the  greatest  material  benefit  a  people  can  derive 
is  that  which  is  supposed  to  flow  from  an  expanding  external 
trade,  frequent  allusions  were  made  to  the  value  of  the  home 
market  and  to  the  vast  economies  effected  by  bringing  field 
and  factory  together.  In  this  chapter  an  effort  will  be  made 
to  show  that  the  internal  trade  of  a  country,  in  the  nature  of 
things,  will  always  be  its  most  important  trade,  and  that 
under  any  rational  system  of  economics  external  trade  must 

173 


174         PROTECTION   AND   PROGRESS 

be  relegated  to  the  second  place  and  become,  as  it  were, 
merely  an  incident  of  national  progress. 

Although  the  Cobdenites  habitually  ignore  this  truism 
when  dwelling  upon  the  importance  of  the  interdependence 
of  nations  and  seek  to  make  it  appear  that  only  foreign 
trade  is  profitable,  statisticians,  even  when  they  make  their 
home  in  Great  Britain,  are  betrayed  into  admitting  the  fact 
that  what  is  derisively  referred  to  by  free  traders  as  the 
"home  market"  is  infinitely  more  important  to  a  people  with 
great  resources  than  the  ability  to  exchange  goods  with 
foreigners. 

That  a  contrary  opinion  should  ever  have  arisen  seems 
to  be  solely  due  to  false  causation.  Observing  the  fact  that 
countries  having  large  quantities  of  articles  to  spare  for 
export  were  prosperous,  it  has  been  assumed  that  the  act 
of  exportation  caused  the  prosperity.  It  is  as  though  one 
should  say  that  the  surplus  flowing  over  the  dam  of  a 
reservoir  was  of  more  consequence  than  the  main  body 
which  supplies  the  power  to  run  countless  machines  or 
furnishes  the  water  for  the  inhabitants  of  a  large  city.  The 
overflow  may  be  utilized  in  some  fashion,  but  obviously  the 
most  important  feature  of  a  reservoir  is  the  accomplishment 
of  the  primary  purpose  of  filling  it  so  that  sufficient  water 
will  be  provided  to  carry  out  certain  designs.  If  the  dam 
achieves  more  than  this  result  it  may  be  reckoned  as  addi- 
tional gain,  but  such  gain  will  necessarily  seem  insignificant 
compared  with  the  returns  from  the  proper  utilization  of 
the  imprisoned  water.  That  this  analogy  is  not  a  forced  one 
will  be  seen  when  we  compare  the  internal  with  the  external 
trades  of  several  of  the  leading  nations  of  the  world. 

According  to  Mulhall  "internal  trade  is  the  real  trade  of 
a  country  comprising  the  total  value  of  agricultural,  manu- 
facturing and  mining  products  handled  by  the  people,  and 
the  value  of  imported  goods  consumed."  Accepting  this 
definition,  and  using  Great  Britain,  a  country  of  com- 
paratively limited  resources,  as  an  illustration,  we  find  that 


INTERNAL  TRADE  175 

the  British  home  trade  vastly  exceeds  the  external  trade  of 
the  nation.  In  1894  the  total  internal  trade  of  the  Unfted 
Kingdom  was  reckoned  at  £1,610,000,000,  made  up  as  fol- 
lows: Agriculture,  £230,000,000;  manufactures,  £876,000,- 
000;  mining,  £78,000,000;  forestry,  etc.,  £9,000,000,  and 
imports,  £417,000,000.  In  the  same  year  the  imports  and 
exports  aggregated  £703,000,000,  the  proportion  of  exports 
being  £286,000,000. 

Here  we  can  see  that  even  in  the  case  of  a  country  con- 
ditioned as  Great  Britain  is  the  home  trade  is  more  than 
double  the  foreign  trade.  When  we  resort  to  comparisons 
we  find  that  although  the  United  Kingdom  has  subordinated 
every  other  industry  to  those  of  manufacturing  and  mining 
the  home  consumption  of  manufactured  and  mineral  products 
is  enormously  in  excess  of  the  exports  of  manufactured 
articles  and  minerals.  Assuming  that  the  exports  of  Great 
Britain  in  1894  were  wholly  composed  of  manufactured 
articles  and  minerals,  a  comparison  will  show  that  the 
domestic  takings  were  more  than  three  times  as  large  as  the 
total  exports.  Thus  we  see  that  even  in  England  the  prime 
object  is  to  supply  the  home  demand,  and  that  the  export 
trade,  as  in  the  case  of  the  reservoir  illustration,  merely 
represents  the  overflow. 

But  if  we  desire  a  more  convincing  illustration  of  the 
value  of  the  home  market  we  must  direct  our  attention  to 
a  country  where  the  conditions  as  to  natural  resources  are 
better  than  those  of  Great  Britain.  Such  a  country  should 
be  one  whose  area  is  great  enough  and  its  soil  sufficiently 
fertile  to  produce  all  the  food  required  by  a  teeming  popu- 
lation, and  whose  fields,  in  addition,  would  be  broad  enough 
to  produce  the  fibers  and  other  raw  materials  to  maintain  a 
manufacturing  industry ;  while  beneath  the  earth  would  have 
to  be  vast  mineral  resources,  including  abundant  stores  of 
fuel  for  the  creation  of  energy  and  to  provide  warmth. 

There  are  several  countries  which  meet  this  description, 
and   pre-eminent  among  them   is   the  United   States.     Its 


176         PROTECTION  AND  PROGRESS 

agricultural  and  mineral  resources  appear  to  be  boundless. 
They  are  so  varied  in  their  character  and  so  extensive  that 
the  nation  might  work  out  its  own  destiny  without  drawing 
upon  the  outside  world.  It  produces  within  its  borders 
nearly  everything  useful  to  man.  The  list  of  its  productions 
embraces  a  large  proportion  of  those  articles  in  which  Great 
Britain  is  deficient.  An  examination  of  the  tables  of  British 
imports  shows  that  they  are  made  up  in  great  part  of  those 
things  which  Americans  produce  in  excess  of  their  needs. 
Cattle,  grain  and  flour,  raw  cotton,  sheep  and  lambs,  dead 
meat,  butter  and  margarine,  wood  and  timber,  oils,  seeds, 
fruits  and  hops,  currants  and  raisins,  wine,  cheese,  copper 
ore,  lead,  eggs  and  tobacco  are  among  the  leading  British 
imports.  In  our  tables  of  external  trade  they  appear  as 
articles  of  export.  In  addition  to  these,  Great  Britain  also 
draws  upon  foreign  countries  for  wool,  sugar,  flax,  hemp 
and  jute,  iron  ore  and  zinc,  all  of  which  we  can  and  undoubt- 
edly will  produce  in  sufficiently  large  quantities  in  the  near 
future  to  meet  the  home  demand  and  perhaps  a  surplus  for 
export. 

In  another  place,  when  the  question  What  constitutes 
an  exotic  industry?  is  discussed,  it  will  be  shown  thai  none 
of  these  articles  meet  with  any  impediment  to  their  profitable 
production  in  the  United  States,  whereas  Great  Britain  is 
by  climatic  and  other  natural  obstacles  debarred  from  provid- 
ing herself  with  them  in  large  enough  quantities  to  meet  the 
needs  of  her  population  without  drawing  upon  the  foreigner. 
Here  this  peculiarity  is  referred  to  merely  to  emphasize  the 
fact  that  there  is  an  essential  difference  in  the  productive 
capabilities  of  Great  Britain  and  the  United  States.  But 
it  is  not  of  that  character  which  the  Cobdenites  have  errone- 
ously assumed  exists,  for  while  it  may  be  true  that  nature 
has  acted  in  a  one-sided  manner  with  some  nations,  as  in  the 
case  of  England,  which  we  have  seen  is  deficient  in  many 
natural  productions,  there  are  other  nations  where  no  such 
deficiency  is  noticeable,  and  they  must  therefore  be  regarded 


INTERNAL  TRADE  177 

as  having  superior  natural  advantages  which,  when  joined 
with  acquired  capabilities,  must  ultimately  result  in  com- 
mercial and  manufacturing  superiority. 

Consciously  or  unconsciously,  the  adherents  of  the  Man- 
chester school  have  by  their  teachings  obscured  this  vital 
fact.  A  large  part  of  mankind  has  been  induced  to  believe 
that  it  is  true  economy  to  transfer  to  the  less  favored  coun- 
tries the  profits  and  advantages  which  the  more  favored 
may  enjoy  if  they  feel  so  disposed.  Singularly  enough,  they 
have  succeeded  in  strengthening  this  belief  by  parading 
*  British  dependency  as  an  advantage.  All  free  traders  habit- 
ually dwell  with  pride  on  the  vast  proportions  of  the  imports 
of  Great  Britain,  and  many  assume  that  they  triumphantly 
establish  the  soundness  of  the  theories  advanced  by  the 
Manchester  school.  Some  there  are,  however,  who  are 
beginning  to  regard  with  alarm  the  ever  increasing  depend- 
ence of  the  United  Kingdom  and  are  no  longer  disposed  to 
regard  it  as  a  commercial  advantage. 

One  of  these  latter,  commenting  on  the  singular  halluci- 
nation that  the  less  a  people  have  to  sell  in  proportion  to 
what  they  are  compelled  to  buy  the  more  prosperous  they  are 
likely  to  become,  says :  "Sir  Courtenay  Boyle  is  evidently 
inclined  to  draw  comfort  from  the  fact  that  when  the  imports 
and  the  exports  are  calculated  for  the  different  countries, 
per  head  of  population,  the  United  Kingdom  stands  far 
ahead  of  its  rivals  in  trade.  *  *  *  This  superiority  in 
the  value  of  exports  and  imports  per  head  does  not  signify 
that  we  are  more  prosperous  than  other  countries  and  is 
rather  a  misleading  return.  The  United  States  and  Germany 
both  produce  a  very  large  proportion  of  their  own  food 
supply,  while  Germany  has  for  some  years  practically  sup- 
plied the  whole  of  her  home  demand  for  manufactured 
goods  and  the  United  States  is  following  in  her  footsteps 
in  this  respect.  The  United  Kingdom  produces  a  very  small 
proportion   of   its    food    requirements     *     *     *     and    has 

ceased  to  supply  the  whole  demand  for  manufactured  goods,. 
12 


178        PROTECTION  AND   PROGRESS 

The  value  of  the  imports  for  the  latter  country  are,  therefore, 
much  greater  than  the  corresponding  figures  for  the  two  for- 
mer ;  and  the  difference  is  not  a  measure  of  greater  commer- 
cial prosperity,  but  of  our  greater  dependence  upon  foreign 
trade."'-^ 

It  is  hardly  possible  to  dissent  from  this  view,  and  even 
free  traders  shrink  from  doing  so  when  the  matter  is  pre- 
sented in  concrete  form.  When  they  are  confronted  with  the 
possibility  of  a  conflict  with  foreign  powers  and  recognize 
the  straits  in  which  their  country  may  be  placed  through 
insufficiency  of  food  supplies  or  by  being  deprived  of  the 
necessary  raw  materials  for  the  successful  prosecution* of 
their  manufacturing  industries,  they  assent  to  a  policy  of 
extraordinary  taxation  to  avert  the  consequences  of  a  false 
economic  policy.  Their  statesmen  call  expenditures  made 
for  this  purpose  provision  for  the  national  defense,  but  this 
is  juggling  with  phrases.  The  money  expended  to  keep  open 
English  communication  with  the  outside  world  so  as  to  avert 
the  possibility  of  starvation  or  the  interruption  of  British 
manufacturing  is  as  unmistakably  an  artificial  help  to  indus- 
tries which  would  otherwise  utterly  fail  as  an  appropriation 
made  by  a  protectionist  country  for  the  encouragement  of 
beet  sugar  manufacture,  or  a  tariff  levied  for  protective 
purposes. 

While  free  traders  can  thus  easily  be  persuaded  to  indi- 
rectly adopt  protective  measures  for  the  preservation  of 
their  external  trade,  and  justify  the  enormous  expenditures 
for  so-called  defensive  purposes  by  pointing  to  the  magnitude 
of  their  dealings  with  foreigners  and  the  profits  derived 
therefrom,  they  appear  utterly  incapable  of  perceiving  that 
a  similar  policy  applied  to  the  promotion  of  internal  trade  in 
the  United  States  has  accomplished  infinitely  greater  com- 
mercial results  without  incurring  the  loss  of  energy  and 
waste  of  energy  and  fuel  which  an  unnecessary  external 

♦Kershaw,  Future  of  British  Trade,  Fortnightly,  November,  1897. 


INTERNAL  TRADE  179 

trade  entails.  Free  traders  also  shut  their  eyes  to  the  fact 
that  the  creation  of  a  manufacturing  industry  averts  the 
danger  to  which  a  dependent  nation  is  always  subject. 
While  it  is  inconceivable  that  a  country  with  resources  as 
vast  as  those  of  the  United  States  could  ever  suffer  for  want 
of  food  because  of  the  action  of  external  enemies,  it  is  easy 
to  comprehend  that  if  it  had  neglected  to  establish  manufac- 
tures and  had  assumed  the  role  of  a  mere  producer  of  food 
supplies  and  raw  materials  mapped  out  for  it  by  Cobdenites 
its  people  would  be  as  greatly  hampered  in  case  of  foreign 
aggression  for  want  of  manufactured  articles  as  were  those 
of  the  Confederate  States  while  the  Civil  War  was  in 
progress. 

Let  us  see  whether  this  assertion  can  be  made  good  by 
a  resort  to  the  figures  showing  the  growth  and  extent  of  the 
home  market  of  the  United  States.  Still  retaining  Mulhall 
for  our  guide  we  find  that  in  1894  the  internal  trade  of  the 
United  States  amounted  to  £3,125,000,000 — nearly  double 
that  of  the  United  Kingdom  in  the  same  year.  According 
to  the  authority  we  are  following  it  was  made  up  as  follows : 
Agricultural  products,  £813,000,000;  manufactures,  £1,952,- 
000,000;  products  of  forestry  and  fisheries,  £130,000,000; 
mineral  products,  £94,000,000;  imports,  £136,000,000. 

These  figures  Mr.  Mulhall  tells  us  represent  a  tenfold  in- 
crease since  1840,  the  internal  trade  of  that  year  aggregating 
only  £318,000,000  sterling.  The  year  1894  was  not  a  favor- 
able one  for  comparison,  as  a  widespread  depression  had 
prostrated  industry  throughout  the  whole  country.  It  is 
not  improbable  that  the  figures  of  1900  will  show  a  fifteen- 
fold  increase;  those  of  1892,  had  they  been  employed,  would 
have  exhibited  at  least  a  twelvefold  advance  over  1840.  But 
Mulhall's  data  are  sufficiently  striking,  and  protectionists  will 
not  object  to  their  use  for  comparative  purposes  or  for 
analysis. 

The  most  conspicuous  fact  disclosed  by  Mulhall's  com- 
parison is  that  the  proportion  of  imports  in  this  enormous 


i8o         PROTECTION   AND   PROGRESS 

American  home  trade  is  comparatively  insignificant,  repre- 
senting only  one-twenty-third  of  the  whole,  whereas  the 
proportion  of  British  imports  to  the  whole  trade  of  the 
United  Kingdom  is  more  than  one-fourth.  In  the  United 
States  the  volume  of  internal  trade  in  1894  was  nearly  ten 
times  as  great  as  that  of  the  foreign  trade  of  the  country; 
Great  Britain's  internal  trade  in  the  same  year  was  not  much 
more  than  twice  as  large  as  the  volume  of  her  exports  and 
imports. 

As  has  been  suggested  in  another  place,  the  extent  and 
importance  of  the  British  external  trade  is  responsible  for 
the  confusion  which  undoubtedly  exists  in  many  minds 
regarding  the  respective  values  of  home  and  foreign  trade. 
It  would  hardly  be  just  to  charge  that  all  free  traders  speak 
with  contempt  of  the  former,  for  there  are  some  who  recog- 
nize that  the  prime  object  of  barter,  even  in  its  most  highly 
developed  form,  is  the  sustenance  of  peoples,  and  that  the 
system  which  accomplishes  this  most  successfully  must  be 
the  best.  But  by  far  the  larger  portion  of  the  followers  of 
Cobden  share  in  the  vulgar  error  that  only  foreign  trade  is 
profitable,  and  that  the  internal  trade  of  a  country  is  as 
profitless  as  the  swapping  of  jackknives  by  boys.  It  is  a 
curious  attitude  for  those  who  have  criticised  the  mercan- 
tilists to  assume,  and  suggests  the  applicability  to  the  free 
trader  of  the  scriptural  injunction  to  remove  the  mote  from 
his  own  eye  before  attempting  to  extract  the  beam  from  his 
brother's. 

The  free  trader  urges  that  the  increase  of  the  national 
wealth  should  be  the  object  of  an  economic  policy,  and  the 
protectionist  agrees  with  him,  but  the  former  contends 
that  the  result  can  be  most  easily  achieved  by  what  may  be 
termed  a  system  of  concentration,  while  the  latter  urges  that 
concentration,  if  carried  too  far,  must  result  in  wastefulness, 
and  that  the  best  economic  policy  is  that  of  diffusion.  The 
free  trade  idea  is  concretely  expressed  in  the  declared  in- 
tention of  the  British  followers  of  Cobden  to  make  Great 


INTERNAL  TRADE  i8i 

Britain  the  workshop  of  the  world ;  the  protectionist  view  is 
clearly  brought  out  in  the  assertion  that  it  is  the  part  of 
wisdom  to  bring  field  and  factory  together. 

Force  of  circumstances  molded  British  opinion.  It  is 
impossible  to  conceive  the  philosophers  of  a  country 
adequately  provided  with  supplies  of  food  and  raw  material 
formulating  theories  resembling  those  advanced  by  Cob- 
den.  Had  the  original  seat  of  British  industry  been  in  such 
a  country  as  Russia  or  the  United  States,  or  were  it  impos- 
sible for  intellect  to  assert  itself  within  the  confines  of  a  small 
island,  there  would  have  been  no  false  economic  doctrines 
taught.  Men  would  not  have  urged  that  unnecessary  trans- 
portation results  in  saving,  or  that  it  is  wise  to  develop  the 
capabilities  of  one  set  of  people  and  to  hinder  the  advance- 
ment of  others  by  depriving  them  of  the  benefits  flowing  from 
a  many-sided  development.  If  the  nations  of  the  world 
were  equally  favored  with  resources  growth  would  have 
proceeded  along  natural  lines,  just  such  lines  as  those  now 
pursued  by  the  United  States. 

Back  of  the  barrier  of  protection  which  had  to  be  reared 
to  permit  the  nation  to  enter  upon  its  career  of  prosperity 
the  United  States  is  working  out  its  destiny  more  economic- 
ally than  Britain,  as  the  presentation  of  facts  concerning 
existing  conditions  will  show.  The  sequel  will  demonstrate 
the  truth  of  this  assertion  so  impressively  that  not  a  single 
voice  will  be  lifted  in  advocacy  of  a  system  which  does  vio- 
lence to  the  term  economic,  and  which  could  only  have  suc- 
ceeded by  retarding  the  progress  of  the  whole  of  mankind, 
including  even  those  who  selfishly  imagined  that  they  could 
benefit  at  the  expense  of  the  rest  of  the  world. 

The  growth  of  internal  trade  of  the  United  States,  which 
keeps  pace  with  the  great  increase  of  population,  conclusively 
proves  the  wisdom  of  making  temporary  sacrifices  to  reach  a 
stage  of  practical  industrial  independence.  The  economic 
policy  adopted  by  the  Americans  in  some  respects  resembles 
that  of  a  pioneer  in  a  country  covered  with  marketable 


i82         PROTECTION  AND  PROGRESS 

timber,  who  makes  the  proceeds  of  his  clearing  operations 
maintain  him  in  comfort  while  he  is  creating  a  farm  from 
which  to  derive  a  future  livelihood.  His  labors  might  have 
proved  more  profitable  temporarily  if  he  had  devoted  him- 
self wholly  to  "lumbering,"  proceeding  from  one  tract  of 
land  to  another  as  rapidly  as  he  had  stripped  the  ground  of 
its  more  valuable  timber,  but  in  the  end  he  would  have  been 
poorer,  for  he  would  have  left  behind  him  a  practically 
valueless  country  incapable  of  supporting  a  man  with  civil- 
ized wants.  Is  there  anyone  who  will  claim  that  the  method 
of  the  prudent  pioneer  is  not  more  beneficial  to  mankind  in 
the  long  run  than  that  of  the  timber  stripper?  The  latter 
may  flourish  for  a  time,  but  the  man  who  has  cleared  a  strip 
of  land  and  put  it  into  condition  for  cultivation  at  the 
expense  of  a  small  sacrifice  of  energy — and  evert  this  may 
have  been  unnecessary  if  he  had  an  opportunity  to  judi- 
ciously dispose  of  his  timber — has  created  a  farm  from 
which  he  and  his  descendants  may  derive  a  perpetual  reve- 
nue. 

Applying  our  illustration  to  the  operations  of  a  whole 
people,  such  as  that  which  was  planted  during  the  colonial 
period  in  the  regions  now  comprising  the  United  States,  we 
find  that  the  pursuit  of  the  system  advocated  by  the  Cobden- 
ites  would  have  proved  as  disastrous  to  the  country  as  timber 
stripping.  It  was  the  chief  aim  of  those  who  established 
plantations  in  America  in  the  colonial  days  to  derive  sup- 
plies of  raw  material  from  them  to  be  worked  up  into  man- 
ufactured articles  in  England.  At  the  time  of  the  settlement 
of  Virginia  the  English  were  suffering  severely  from  the 
diminution  of  their  fuel  supply,  which  threatened  the 
destruction  of  their  iron  industry.  That  was  before  they 
discovered  that  coal  would  prove  a  desirable  substitute  for 
wood  to  generate  heat  for  smelting  ores.  Accordingly,  the 
scheme  of  opening  up  the  Virginian  ore  deposits  was  devised. 
It  never  proved  successful  because  of  the  subsequent  use 
of  coal  in  England,  but  it  may  readily  be  inferred  what  the 


INTERNAL  TRADE  183 

consequences  might  have  been  if  the  fortunate  discovery 
that  coal  would  serve  as  well  as  charcoal  for  converting 
the  ores  into  pigs  had  not  been  made.  Virginia  in  that  event 
might  have  enjoyed  a  temporary  prosperity,  but  the  lands  in 
the  vicinity  of  her  mines  would  have  been  denuded  of  their 
timber  and  the  earth  would  have  been  robbed  of  its  mineral 
stores  for  the  benefit  of  people  living  in  distant  lands. 

When  iron  mining,  owing  to  the  circumstances  related, 
proved  unprofitable,  the  industry  of  the  Virginia  colonists 
was  forced  into  a  fresh  channel  which  held  out  no  greater 
hopes  of  permanent  benefit  to  those  desirous  of  making  a 
home  in  the  new  country  than  the  smelting  of  ores.  The 
attention  of  the  settlers  was  wholly  confined  to  the  cultiva- 
tion of  tobacco.  An  American  historian  tells  us  that  the 
effect  of  this  exclusive  devotion  to  a  single  product  "defeated 
one  of  the  leading  purposes  for  which  the  colony  was 
founded ;  that  is  to  say,  Virginia  failed  to  furnish  England 
with  the  commodities  which  she  had  been  importing  from 
Russia,  Sweden,  Holland,  France,  Spain,  and  the  East."* 

It  is  not  difficult  to  perceive  why  the  hopes  of  the  pro- 
jectors of  the  colonies  and  the  British  people  were  disap- 
pointed. The  concentration  of  the  energies  of  the  Virginia 
colonists  on  the  production  of  a  single  staple  article,  no  mat- 
ter how  profitable  it  may  have  been,  was  responsible  for  the 
failure.  Had  the  colonists  been  encouraged  to  diversify  the 
industries  of  the  plantations  the  hoped-for  results  might 
have  been  attained.  But  such  a  policy  was  undreamed  of  in 
that  day.  The  English  of  the  period  were  as  eager  as  those 
of  the  nineteenth  century  to  absorb  all  the  profits  of  manu- 
facture. It  is  sometimes  charged  that  the  repressive  methods 
adopted  to  prevent  the  growth  of  manufactures  in  the  colo- 
nies was  due  to  the  jealousy  engendered  by  the  teachings  of 
the  mercantilists,  but  a  more  candid  explanation  is  that  which 
admits  that  it  was  inspired  by  the  always  present  desire  of  the 


♦Bruce,    Economic    History   of   Virginia   in    Seventeenth    Century, 
Vol.  II,  p.  393. 


i84         PROTECTION   AND   PROGRESS 

British  to  discourage  human  energy  in  other  lands  when  it 
threatens  to  miHtate  against  the  development  of  the  re- 
sources of  Great  Britain. 

A  critical  examination  of  the  aims  of  seventeenth  and 
eighteenth  century  Englishmen  discloses  that  they  were 
nearly  the  same  as  those  advocated  later  by  the  Manchester 
school.  They  were,  in  brief,  to  induce,  if  possible,  the  rest 
of  the  world  to  devote  itself  to  the  production  of  raw  ma- 
terials and  of  such  articles  as  the  British  Islands  were  inca- 
pable of  producing,  and  leave  to  the  English  the  congenial 
and  profitable  task  of  manufacturing  for  the  whole  of  man- 
kind. The  only  essential  difference  between  the  earlier  and 
later  policies  was  that  before  the  Americans  achieved  their 
independence  it  was  possible  for  the  English  to  forcibly  im- 
pose their  views  on  colonists,  whereas  afterwards  they  were 
obliged  to  present  arguments  calculated  to  convince  the 
people  living  in  undeveloped  countries  that  their  most  prof- 
itable course  would  be  to  devote  themselves  to  the  pursuit 
of  industries  which  would  not  bring  them  into  collision  with 
those  already  established  in  the  United  Kingdom. 

There  is  no  question  about  the  purposes  and  methods  of 
the  British  in  the  colonies  during  the  revolutionary  period. 
We  have  seen  that  at  the  very  outset  the  design  was  to  ex- 
ploit the  mineral  wealth  of  a  section  which  is  now  one  of 
the  most  densely  populated  parts  of  the  United  States.  In" 
the  pursuit  of  this  object  the  British  did  not  shrink  from 
the  destruction  of  the  forests  of  the  new  country.  In  their 
attempts  to  secure  the  supplies  of  iron  necessary  to  carry 
on  their  manufacturing  industries  they  did  not  hesitate  to 
adopt  methods  calculated  to  permanently  impair  the  utility 
of  the  country.  When  they  were  diverted  from  this  purpose 
by  the  discovery  that  coal  would  answer  better  than  wood 
for  smelting  purposes  they  turned  their  attention  in  the  Vir- 
ginia plantation  to  the  production  of  an  article  which  might 
be  profitably  traded  with  and  discouraged  all  other  forms 
of  industry.    The  writer  already  quoted  after  speaking  of  the 


INTERNAL  TRADE  185 

precautions  taken  to  prevent  the  colonists  becoming  self- 
dependent  says : 

"For  these  reasons  it  appeared  to  be  of  vital  importance  to 
the  English  statesmen  of  the  seventeenth  century  that  the 
planters  should  not  be  allowed  to  take  steps  looking  to  the 
development  of  manufacturing  interests  among  them,  and  it 
cannot  be  said  that  their  views  were  entirely  untenable.  To 
permit  the  colonists  to  export  their  agricultural  products  to 
any  foreign  country  and  at  the  same  time  to  foster  manufac- 
tures in  Virginia  was  to  destroy  all  the  ties  except  those  of 
race  uniting  England  to  the  population  of  that  territory. 
*  *  *  The  mercantile  system  bore  less  heavily  on  Vir- 
ginia than  on  New  England.  Her  soil  was  capable  of  pro- 
ducing a  commodity  which  found  a  remunerative  market  in 
the  mother  country;  whereas  New  England  was  thrown 
back  upon  her  agricultural  products,  which  it  was  impossible 
after  1650  to  import  into  England  on  account  of  the  heavy 
duties  then  imposed  to  protect  the  English  farmer  from 
foreign  competition."* 

It  is  hardly  possible  to  disguise  the  fact  that  this  attempt 
to  compel  the  colonists  by  forcible  means  to  remain  in  the 
narrow  agricultural  groove  marked  out  for  them  by  the 
people  of  the  mother  country  was  inspired  by  the  same 
spirit  and  animated  by  desires  precisely  similar  to  those  en- 
tertained by  the  Cobdenites.  As  already  pointed  out,  the 
early  English  were  able  to  coerce,  while  their  successors  were 
obliged  to  resort  to  persuasive  sophistries.  It  does  not 
matter,  however,  what  means  were  or  are  resorted  to ;  the 
consequences  must  be  th?  same  in  such  cases.  If  the  disposi- 
tion of  a  people  to  diversify  their  industries  is  checked  either 
by  force  or  a  mistaken  opinion  that  a  country  can  become 
great  or  prosperous  by  remaining  in  the  condition  of  depend- 
ence which  devotion  to  agriculture  or  the  production  of  ra  w 
materials  implies,  the  result  must  in  either  event  prove  dis- 
astrous. 

*  Bruce,   Economic   History   of  Virginia   in   Seventeenth   Century. 
Vol.  II,  p.  394. 


i86         PROTECTION   AND   PROGRESS 

A  vivid  picture  of  the  condition  to  which  a  people  may 
be  reduced  by  consenting  to  accept  the  role  of  dependents 
may  be  found  in  the  pages  of  an  annahst  wliose  words  are 
epitomized  for  us  by  the  author  of  the  Economic  History  of 
Virginia  in  the  Seventeenth  Century.    Mr.  Bruce  says : 

"Beverly,  who  indulged  a  spirit  of  exaggeration  to  some 
extent,  writing  towards  the  end  of  the  seventeenth  century, 
when  the  English  had  been  in  possession  of  the  country  for 
nearly  a  hundred  years,  reproached  the  inhabitants  not  only 
for  their  slovenly  and  wasteful  system  of  agriculture  and 
their  neglect  of  many  products  to  which  the  soil  was  adapted, 
but  also  for  their  strong  indisposition  to  supply  themselves 
by  local  manufactures  with  a  larger  proportion  of  those 
articles  which  they  had  from  the  foundation  of  the  first  set- 
tlement been  obtaining  by  importation  from  abroad.  The 
Virginians,  he  said,  sheared'  their  sheep  only  to  cool  them. 
There  was  little  thought  of  the  clothing  into  which  the  fleeces 
could  have  been  converted.  The  head  covering  of  the  Vir- 
ginians was  made  of  fur  which  had  been  sent  to  England 
from  the  colony  for  working  up  and  then  returned  in  the 
shape  of  hats  to  be  sold  or  bartered  at  a  great  advance  on 
the  cost  of  raw  material.  A  large  quantity  of  the  hides  which 
were  a  part  of  the  annual  production  of  every  plantation 
were  thrown  on  the  ground  to  rot  or  were  used  to  protect 
goods  from  the  rain  dripping  through  the  leaky  roofs.  Some 
of  the  hides,  it  is  true,  were  manufactured  into  shoes,  but  the 
process  was  so  carelessly  and  rudely  performed  that  the 
planters  bought  English  shoes  in  preference  whenever  the 
opportunity  presented  itself.  Although  the  forests  of  Vir- 
ginia furnished  varieties  of  woods  which  in  delicacy  of  grain 
and  durability  of  fiber  were  particularly  suitable  for  the  man- 
ufacture of  every  kind  of  woodenware,  nevertheless  the  in- 
habitants of  the  colony  persisted  in  obtaining  from  England 
their  chairs,  tables,  stools,  chests,  boxes,  cart  wheels  and 
even  their  bowls  and  birchen  brooms."* 

*Bruce,    Economic    History    of   Virginia   in    Seventeenth   Centur>. 
Vol.  II,  p.  397. 


INTERNAL  TRADE  187 

It  does  not  detract  from  this  narration  to  say  that  the  col- 
onists were  constrained  ;  the  result  would  have  been  precisely 
the  same  if  they  had  been  perfectly  free  agents  and  had  fol- 
lowed or  accepted  as  sound  a  theory  similar  to  that  promul- 
gated later  by  the  adherents  of  the  Manchester  school,  who 
taught  that  a  country  finds  its  greatest  profit  in  following 
those  pursuits  to  which  it  seems  most  naturally  adapted. 
The  production  of  tobacco  in  Virginia  seemed  to  be  such  a 
pursuit,  and  other  forms  of  agriculture  offered  attractions 
in  the  neighboring  colonies ;  therefore,  according  to  the 
assumption  of  the  Cobdenites,  the  colonists  ought  to  have 
been  prosperous  and  happy  people.  Indeed,  relying  on  the 
assertions  of  Adam  Smith,  they  assume  that  such  was  the 
case,  but  the  evidence  is  overwhelming  that  the  distinguished 
economist  was  misled  by  surface  indications  and  that  the 
American  colonial  prosperity  he  speaks  of  in  his  "Wealth  of 
Nations"  was  not  general. 

Doubtless  the  American  planters  were  more  or  less  thriv- 
ing on  the  eve  of  the  Revolution,  but  the  masses  were  not. 
On  that  point  modern  historians  speak  with  no  uncertain 
voice.  Years  after  the  conclusion  of  peace,  owing  to  the 
backwardness  of  the  colonies  in  manufacturing,  the  condi- 
tion of  the  people  was  most  deplorable.  McMaster  gives  a 
glimpse  of  the  life  of  the  average  American  in  this  interest- 
ing passage.  After  reciting  the  fact  that  a  workingman  who 
could  earn  fifteen  shillings  a  week  was  fortunate,  he  goes 
on  to  say: 

"On  such  a  pittance  it  was  only  by  the  strictest  economy 
that  a  mechanic  kept  his  children  from  starvation  and  himself 
from  jail.  In  the  low  and  dingy  rooms  which  he  called  his 
home  were  wanting  many  articles  of  adornment  and  use  now 
to  be  found  in  the  dwellings  of  the  poorest  of  his  class.  Sand 
sprinkled  on  the  flood  did  duty  as  a  carpet.  There  was  no 
glass  on  his  table ;  there  was  no  china  in  his  cupboard ; 
there  were  no  prints  on  his  wall.  What  a  stove  was  he  did 
not  know ;   coal  he  had  never  seen ;   matches  he  had  never 


i88         PROTECTION   AND   PROGRESS 

heard  of.  Over  a  lire  of  fragments  of  boxes  and  barrels, 
which  he  hghted  with  the  sparks  struck  with  a  flint  or  with 
hve  coals  brought  from  a  neighbor's  hearth,  he  cooked  up 
a  rude  meal  and  served  it  in  pewter  dishes.  He  rarely  tasted 
fresh  meat  as  often  as  once  a  week,  and  paid  for  it  a  much 
higher  price  than  his  posterity.  Everything,  indeed,  which 
ranked  as  a  staple  of  life  was  very  costly.  Corn  rtood  at 
three  shillings  the  bushel,  wheat  at  eight  shillings  and  six 
pence,  an  assize  of  bread  was  four  pence,  a  pound  of  salt 
was  ten  pence.  *  *  *  jf  the  food  of  an  artisan  would 
now  be  thought  coarse,  his  clothes  would  be  thought  abom- 
inable. A  pair  of  yellow  buckskin  or  leathern  breeches,  a 
checked  shirt,  a  red  flannel  jacket,  a  rusty  felt  hat  cocked 
up  at  the  corners,  shoes  of  neatskin  set  off  with  huge  buckles 
of  brass,  and  a  leathern  apron  comprised  his  scanty  ward- 
robe. The  leather  he  smeared  with  grease  to  keep  it  soft  and 
flexible."* 

This  picture  describes  better  than  volumes  of  statistics 
could  the  arrest  of  development  in  the  colonies  owing  to  an 
economic  policy  which  compelled  the  people  to  devote  them- 
selves to  the  production  of  rude  products.  It  shows  conclu- 
sively that  the  highly  colored  statement  of  Smith  that  the 
condition  of  labor  in  the  colonies  was  enviable  was  abso- 
lutely unreliable  and  that  the  fact  cited  by  him  that  the 
colonists  could  "afford  to  import  the  more  advanced  and 
more  refined  manufactures"  from  the  mother  country  was 
not  due  to  the  prosperity  of  the  many,  but  that  such  importa- 
tions were  confined  to  the  class  who  were  profiting  by  slave 
labor  and  who  extracted  with  extreme  difficulty  from  the 
great  estates  existing  in  a  country  where  land  was  so  abun- 
dant incomes  which  would  appear  meager  compared  with 
those  derived  from  very  much  smaller  properties  in  a  coun- 
try provided  with  a  manufacturing  industry.f 


*McMaster,  History  of  the  People  of  the  United  States. 
tSmitk,  Wealth  of  Nations,  Book  IV,  Chap.  VII. 


INTERNAL  TRADE  189 

There  can  be  no  doubt  whatever  that  the  British  poHcy 
of  repressing  manufactures  in  the  colonies  would  have 
proved  permanently  successful  if  there  had  been  any  dispo- 
sition on  the  part  of  the  colonists  to  accept  teachings  re- 
sembling those  of  Smith.  But  they  could  not  be  persuaded 
that  the  road  to  prosperity  would  ever  be  found  while  they 
remained  in  a  state  of  dependence  on  the  mother  country. 
They  rejected  the  soothing  assurance  that  their  best  inter- 
ests would  be  consulted  by  importing  from  Great  Britain 
"all  the  more  refined  or  more  advanced  manufactures,"  be- 
cause they  could  be  obtained  "cheaper  than  they  could  make 
them  for  themselves." 

The  author  of  "Wealth  of  Nations"  understood  the 
nature  of  the  difficulties  in  America  at  the  outbreak  of  the 
Revolution  better  than  most  of  his  contemporaries.  There 
is  a  suggestion  in  his  work  that  he  was  inclined  to  regard 
the  future  transference  of  the  seat  of  British  power  to  the 
new  world  as  a  remote  possibility,  but  the  major  part  of  his 
argument  compels  the  belief  that  he  felt  certain  that  so  long 
as  the  colonies  were  devoted  to  agriculture  they  must  remain 
dependent  upon  the  mother  country. 

While  Smith  felt  assured  on  this  point,  he  could  safely  de- 
nounce as  a  mischievous  policy  that  of  attempting  to  restrain 
the  colonists  by  legislation  from  engaging  in  "more  advanced 
or  more  refined  manufactures."  Why  pass  laws  to  effect 
something  which  would  inevitably  be  accomplished  without 
friction  ?  If  it  was  impossible  for  the  colonists  to  manufac- 
ture as  cheaply  as  in  the  mother  country,  and  if  they  were 
not  permitted  to  adopt  protective  measures,  how  could  they 
hope  to  engage  in  rivalry  with  the  manufacturers  of  Great 
Britain  ?  Smith  saw  they  could  not,  and  therefore  considered 
the  restraints  imposed  on  the  colonists  superfluous. 

An  economist  whose  writings  have  attracted  worldwide 
attention  has  described  the  limitations  under  which  Smith 
produced  his  great  book,  and  pointedly  intimates  that  he 
found  it  necessary  to  indulge  in  a  species  of  deception  which 


190         PROTECTION   AND   PROGRESS 

inclined  proprietors  of  large  estates  to  believe  that  he  shared 
their  contempt  for  the  aspirations  of  the  commercial  classes.* 
A  question  arises  whether  this  estimate  of  the  Scotch  econo- 
mist does  him  justice.  There  is  enough  of  vacillation  and 
uncertainty  in  his  work  to  account  for  his  alleged  sneers  at 
the  movement  which  was  gaining  force  when  he  wrote  with- 
out attributing  it  to  conscious  dishonesty.  It  is  not  unrea- 
sonable to  suppose  that  when  he  summed  up  his  views  of  the 
purposes  of  the  American  colonists  he  saw  that  commercial 
independence  was  aimed  at  in  America,  and  that  the  con- 
troversy was  not  one  over  taxation  and  representation,  as  has 
been  so  generally  assumed.  So  much  may  be  inferred  from 
this  language,  which  contains  a  sneer  and  a  prediction : 
"From  shopkeepers,  attorneys  and  tradesmen  they  are  be- 
come statesmen  and  legislators,  and  are  employed  in  contriv- 
ing a  new  form  of  government  for  an  extensive  empire, 
which  they  flatter  themselves  will  become,  and  which  indeed 
seems  very  likely  to  become,  one  of  the  greatest  and  most 
formidable  in  the  world. "f 

There  is  no  doubt  that  the  shopkeepers  and  tradesmen 
referred  to  by  Smith  aimed  at  the  creation  of  a  great  empire 
and  that  they  felt  that  the  vastness  of  the  resources  of  their 
country  would  assure  the  attainment  of  their  aspirations. 
No  matter  how  much  of  a  purely  political  nature  may  be 
found  in  the  discussions  of  revolutionary  times  it  is  easy  to 
discover  a  strong  undercurrent  of  the  practical.  The  de- 
mand for  liberty  cannot,  therefore,  be  construed  into  a  mere 
desire  for  representation ;  it  was  more  likely  an  expression 
of  the  determination  of  the  colonists  to  develop  their  ma- 
terial resources  without  interference  from  the  mother  coun- 
try. 

This  fact  is  often  obscured  by  misconception  of  the  mo- 
tives of  those  who  advocated  freedom  of  trade  with  Great 


*George,  The  Science  of  Political  Economy,  p.  167,  etc. 
t Smith,  Wealth  of  Nations,  Book  IV,  Chap.  VII. 


INTERNAL  TRADE  IQI 

Britain  after  the  declaration  of  peace.  Such  demands  did 
not  imply  adhesion  on  the  part  of  those  preferring  them  to 
the  idea  that  the  United  States  would  derive  a  greater  advan- 
tage by  purchasing  the  cheap  manufactured  articles  of  Eng- 
land than  from  developing  their  own  resources.  On  the 
contrary,  there  was  unmistakably  a  preponderance  of  opinion 
in  favor  of  promoting  home  industries,  and  many  of  those 
who  appear  to  have  recorded  themselves  as  favoring  freedom 
of  trade  were  advocates  of  a  protective  tariff. 

The  explanation  of  the  apparent  contradiction  consists 
in  the  different  interpretations  placed  by  men  on  the  term 
"freedom  of  trade."  Investigation  will  disclose  that  the 
founders  of  the  republic  did  not  deem  that  protective  laws 
were  to  be  placed  in  the  category  of  obstacles  to  freedom 
of  trade.  They  looked  upon  some  of  the  excesses  of  the 
Navigation  Act  of  Great  Britain  and  the  methods  of  the 
Mediterranean  piratical  rulers  as  hindrances  to  commerce, 
but  they  could  not  be  induced  to  believe  that  steps  taken 
to  encourage  home  industries  were  objectionable. 

But  whatever  may  have  been  the  views  of  the  time  con- 
cerning a  question  which  is  still  the  subject  of  contention. 
it  is  quite  certain  that  the  majority  of  the  revolting  colonists 
were  in  favor  of  taxing  imports  in  order  to  encourage  home 
industries.*  This  purpose,  which  found  expression  in  the 
Federal  Constitution,  was  more  or  less  persistently  adhered  to 
until  the  slave-holding  oligarchy  of  the  South  became  domi- 
nant. There  has  never  been  a  time  since  the  formation  of 
the  Government  when  there  has  not  been  a  great  party  in 
this  country  whose  members  were  profoundly  convinced  that 
genuine  prosperity  could  only  be  assured  by  planting  on  our 
soil  a  strong  manufacturing  industry. 

Recurring  to  the  illustration  employed  at  the  beginning 
of  this  chapter,  it  may  be  said  that  the  masses  of  the  Ameri- 
can people  have  always  been  firm  believers  in  the  policy  of 

*Constitution  of  the  United  States. 


192         PROTECTION   AND   PROGRESS 

filling  the  national  commercial  reservoir  and  that  they  were 
ready  to  undergo  a  present  dearness  if  the  apparent  sacrifice 
promised  to  bring  future  cheapness,  and  plenty  of  employ- 
ment for  the  people  while  this  latter  result  was  being 
achieved.  Even  when  the  slave  owners  were  in  full  control 
at  Washington  and  openly  proclaimed  that  the  interests  of 
their  "peculiar  institution"  required  free  imports  of  cheap 
British  manufactured  goods  so  that  raw  cotton  could  be 
produced  in  greater  abundance  and  on  more  favorable  terms, 
the  free  white  people  of  the  North  never  lost  heart,  and  were 
always  ready  to  seize  the  opportunity  to  advance  the  real 
prosperity  of  the  country  by  encouraging  domestic  produc- 
tion in  every  line  of  industry. 

The  opportunity  presented  by  the  necessities  created  by 
the  Civil  War  was  promptly  seized  by  the  advocates  of  pro- 
tection, and  since  the  passage  of  the  Morrill  Tariff  Act  there 
has  been  a  steady  adherence  to  the  policy  of  filling  the  na- 
tional industrial  reservoir.  Even  the  tentative  efforts  of 
Cleveland  to  bring  about  a  recrudescence  of  the  ideas  of  the 
Manchester  school  were  defended  on  the  ground  that  the 
proposed  changes  in  the  tariff  would  still  leave  the  duties  so 
high  that  incidental  protection  would  be  afforded.  Assur- 
ances of  this  kind  were  absolutely  necessary,  for,  as  has 
been  judiciously  observed  by  an  English  advocate  of  what  is 
called  "Fair  Trade,"  such  a  thing  as  an  absolute  free  trader, 
outside  of  a  narrow  clique  of  doctrinaires,  is  almost  unknown 
in  the  United  States. 

The  effects  of  the  steadfast  devotion  of  Americans  to  the 
sensible  economic  course  of  home  development  may  be  in- 
ferred from  the  statistics  of  Mulhall,  who  shows  in  the  most 
convincing  fashion  that  the  efforts  to  fill  the  national  com- 
mercial reservoir  have  not  been  unavailing,  and  that  from 
being  a  dependent  nation  we  have  in  a  comparatively  brief 
space  of  time  nearly  effected  our  industrial  emancipation. 

The  figures  of  internal  trade  derived  from  Mulhall  to 
which  we  are  about  to  call  attention  display  the  vast  extent 


INTERNAL  TRADE  193 

of  the  industrial  reservoir  of  the  United  States  and  the 
great  measure  of  success  that  has  attended  the  efforts  of 
the  protectionists  to  fill  it.  They  will  show  also,  when  com- 
pared with  the  statistics  exhibiting  the  degree  of  success 
achieved  by  other  nations,  that  the  United  States  stands 
pre-eminent  among  the  progressive  peoples  of  the  earth. 

Taking  as  our  starting  point  i860  and  the  year  1894  as  a 
date  for  measuring  the  advances  made,  we  find  that  in  the 
beginning  of  the  period  the  internal  trade  in  agricultural 
products  in  the  United  States  was  £420,000,000 ;  thirty-four 
years  later  it  was  £813,000,000;  trade  in  manufactured 
products  amounted  to  £392,000,000  in  i860;  in  1894  it  had 
expanded  to  £1,952,000,000;  our  forests  and  fisheries  fur- 
nished an  internal  exchange  aggregating  only  £35,000,000 
in  i860;  the  volume  of  this  trade  reached  £130,000,000  in 
1894 ;  the  value  of  minerals  represented  in  our  mineral  trade 
was  £30,000,000  in  the  first  named  and  £94,000,000  in  the  last 
year  of  the  period.  While  our  imports  which  may  be  re- 
garded as  an  index  of  the  state  of  the  country's  dependence 
on  foreigners  only  increased  from  £75,000,000  in  i860  to 
£136,000,000  in  1894,  the  aggregates  of  these  diflFerent 
headings  show  that  our  internal  trade  amounted  to  £952,000,- 
000  in  i860  and  to  £3,125,000,000  in  1894.* 

The  striking  feature  of  the  foregoing  presentation  is  the 
enormous  development  of  manufactures,  which  represents 
a  fivefold  increase,  and  of  the  threefold  expansion  of  the 
mineral  industry;  while  imports  scarcely  doubled  during 
the  period.  It  is  quite  obvious  from  these  comparisons  that 
the  object  of  the  protectionists  has  been  steadily  persevered 
in  and  that  it  is  in  a  fair  way  to  be  accomplished.  The  work 
of  filling  the  domestic  industrial  reservoir  has  gone  on  un- 
interruptedly, and  during  its  progress  the  growing  popula- 
tion of  the  country  has  made  constantly  increasing  demands 
upon  it  without  impairing  the  supply,  which,  as  the  rela- 


♦Mulhall,  Industries  and  Wealth  of  Nations,   1896. 
13 


194         PROTECTION   AND   PROGRESS 

tively  decreasing  imports  show,  is  rapidly  becoming  great 
enough  to  meet  the  wants  of  a  nation  whose  consumptive 
ability  far  surpasses  that  of  any  other  on  the  globe. 

This  tremendous  result  has  been  accomplished  without 
making  an  appreciable  sacrifice.  It  is  true  that  the  level  of 
prices  in  the  United  States  has  been  higher  than  that  in  some 
other  countries,  but  as  the  standard  of  comfort  of  the  masses 
is  admittedly  much  higher  in  this  than  any  country  in 
the  world  it  is  idle  to  argue  that  the  cost  of  living  places 
Americans  at  a  disadvantage.  The  range  of  prices  is  much 
higher  in  England  than  on  the  continent,  but  no  one  pre- 
tends on  that  account  to  assume  that  continental  peoples  are 
better  off  than  the  British.  On  the  contrary,  it  is  conceded 
that  the  reverse  is  the  case. 

This  is  a  condition  that  is  likely  to  prevail  in  the  United 
Kingdom  so  long  as  its  people  maintain  their  ability  to  cre- 
ate wealth  on  a  large  scale.  When  Great  Britain  ceases  to 
do  this  and  becomes  a  mere  nation  of  consumers  the  situation 
will  be  greatly  altered.  This  is  a  fact  which  British  econo- 
mists should  have  found  no  difficulty  in  grasping,  for  they 
have  always  taught  that  the  condition  of  the  people  must 
depend  upon  the  augmentation  of  the  national  wealth  by  pro- 
duction. That  they  were  incapable  of  perceiving  that  the 
United  States  was  pursuing  a  policy  which  had  for  its  object 
the  accomplishment  of  a  result  which  their  teachings  pro- 
claimed as  desirable  can  only  be  explained  by  assuming  that 
political  economists  are  prone  to  overlook  the  fact  that  there 
may  be  more  than  one  practicable  mode  of  reaching  a  de-. 
sirable  goal.  Thus  it  may  be  the  natural  method,  it  certainly 
is  the  most  primitive  one,  for  a  man  who  purposes  visiting 
a  distant  city  to  walk ;  but  the  person  who  takes  that  highly 
artificial  development,  the  modern  express  train,  is  likely 
to  reach  his  destination  first.  The  resort  to  the  artificial  con- 
trivance may  seem  the  more  expensive,  but  in  the  long  run  it 
will  be  found  the  cheapest. 

Adam  Smith  and  a  long  line  of  British  free  traders  who 


INTERNAL  TRADE  195 

have  followed  him  have  persistently  urged  that  the  most 
profitable  plan  for  a  people  to  adopt  is  the  natural  one.  They 
have  not  hesitated  to  recommend  that  new  countries  should 
imitate  the  example  of  the  weary  plodder  and  leave  to  older 
nations  the  use  of  express  trains.  Fortunately  there  has 
always  been  a  suspicion  in  the  United  States,  except  within 
the  walls  of  certain  colleges,  that  advice  of  this  kind  is  not 
entirely  disinterested.  Had  the  case  been  otherwise  the 
census  records  might  have  made  an  entirely  different  show- 
ing and  Mr.  Mulhall  would  not  have  been  called  upon  to 
note  that  the  wealth  of  the  United  States  had  increased  dur- 
ing the  protective  period  at  a  rate  which  makes  British  ex- 
pansion seem  insignificant.  According  to  our  English 
authority,  in  i860  the  wealth,  urban  and  agricultural,  of 
the  United  States  amounted  to  £3,366,000,000;  in  1895  it  had 
increased  to  £16,350,000,000.  During  the  same  period  Brit- 
ish wealth  increased  from  £7,206,000,000  to  £11,806,000,- 
000.* 

In  thirty-five  years  American  wealth  increased  fivefold, 
while  that  of  Great  Britain  fell  far  short  of  doubling  itself. 
Whatever  else  this  may  demonstrate,  it  certainly  shows 
that  the  American  effort  to  fill  the  home  reservoir  was  suc- 
cessful. 


^Mulhall,  Industries  and  Wealth  of  Nations,    1896. 


CHAPTER  X. 

AGRICULTURE  AND   ECONOMICS. 

FARMING  AIDED  BY  PROTECTION  AND  HINDERED  BY  FREE  TRADE. 

Agriculture  in  the  United  States — It  has  not  been  retarded  by  the 
diversion  of  capital  to  manufacturing — Troubles  of  American 
farmers  due  to  overproduction — Relief  afforded  by  the  growth 
of  a  great  urban  population — Adam  Smith's  erroneous  assump- 
tion concerning  the  difficulty  of  creating  capital — The  mobility 
of  capital  causes  it  to  be  transferred  to  points  where  it  can  be 
most  profitably  employed — The  artificial  stimulus  of  manufac- 
tures has  directly  contributed  to  the  development  of  American 
agriculture — The  United  States  the  leading  agricultural  nation — 
Protection  responsible  for  improved  processes  of  production — 
The  part  played  by  machinery  in  American  farming — Why  agri- 
culture makes  no  progress  in  some  countries — Value  of  Ameri- 
can farm  products — Comparisons  of  American  and  British 
growth — The  repression  of  farming  in  England  due  to  free 
trade — The  safety  of  the  British  nation  imperiled — Heavy 
taxes  imposed  upon  the  British  to  maintain  food  supplies — The 
creation  of  a  great  pauper  class — Resemblance  to  conditions  in 
ancient  Rome. 

The  Cobdenite  who  has  laboriously  inculcated  the  idea 
that  the  aim  of  statesmen  should  be  to  promote  the  national 
wealth  when  confronted  with  such  evidence  as  that  pre- 
sented in  the  foregoing  chapter  is,  as  a  rule  inclined 
to  fall  back  on  the  assumption  that  still  greater 
results  would  have  been  achieved  had  protectionist 
United  States  devoted  itself  to  the  development  of  its  "true 
natural  resources."  This  term,  when  employed  by  a  follower 
of  the  Manchester  school,  applies  to  agriculture  or  the  pro- 
duction of  raw  materials,  it  being  assumed  that  it  is  an 

unnatural  thing  for  the  people  of  a  new  country  to  develop 

196 


AGRICULTURE  197 

its  resources  beyond  the  food  and  raw  product  stage,  because 
the  peoples  of  older  countries  with  accumulated  capitals  and 
acquired  capabilities  are  able  for  a  time  to  produce  manu- 
factured articles  more  cheaply  than  the  former. 

The  attempt  of  the  Cobdenites  to  fortify  this  argument 
has  led  to  some  extraordinary  assumptions  and  not  a  little 
misrepresentation.  It  has  been  asserted  without  any  attempt 
whattever  to  justify  the  charge  that  the  protective  system  of 
the  United  States  tended  to  retard  its  agricultural  develop- 
ment and  that  American  farmers  have  been  made  the  vic- 
tims of  a  system  designed  to  promote  one  branch  of  industry 
at  the  expense  of  another.  This  latter  propensity  is  assumed 
to  be  one  of  the  most  pronounced  characteristics  of  protec- 
tion. 

The  reader  of  a  Cobden  treatise  who  happened  to  be  un- 
provided with  other  facts  to  set  him  right  might  easily 
infer  that  the  efifect  of  protection  in  the  United  States  had 
been  to  stunt  agriculture,  and  that  conversely  the  British 
free  trade  policy  was  one  which  had  operated  so  beneficently 
in  Great  Britain  that  all  industries  had  flourished  alike.  In 
the  following  pages  these  assumptions  will  be  examined  and 
proof  will  be  furnished  that  every  Cobdenite  prediction  has 
been  falsified  by  the  event  and  that  every  statement  that 
protection  has  stimulated  manufactures  at  the  expense  of 
the  agricultural  class  in  the  United  States  is  absolutely 
without  foundation ;  while,  on  the  other  hand,  incontestable 
evidence  will  be  produced  to  affirm  the  protectionist  charge 
that  the  British  free  trade  policy  has  ruined  English  agri- 
culture. 

The  evidence  regarding  the. progress  of  American  agri- 
culture is  so  abundant  it  is  extraordinary  that  attempts  are 
made  to  create  the  impression  that  it  has  been  retarded  by  the 
operations  of  a  protective  tariff.  It  is  true  that  the  farmers 
of  the  United  States  have  had  occasion  during  recent  years 
to  complain  that  their  rewards  were  not  as  satisfactory  as 
formerly,  but  an  investigation  of  their  complaints  develops 


198         PROTECTION   AND   PROGRESS 

Lhe  fact  that  such  evils  as  they  have  experienced  would  have 
been  greatly  accentuated  had  American  statesmen  made  the 
fatal  blunder  of  neglecting  the  encouragement  of  manufac- 
tures. There  can  be  no  doubt  on  this  point,  for  the  evidence 
is  overwhelming  that  the  farmers  of  the  United  States  have 
been  suffering  from  the  combined  effects  of  an  appreciating 
money  and  overproduction,  which  together  have  caused 
a  tremendous  fall  in  the  prices  of  American  farm  products. 

The  Cobdenites  have  frankly  avowed  that  the  success  of 
their  system  depended  upon  the  stimulation  of  the  produc- 
tion of  raw  materials  and  food  supplies  by  other  countries 
so  that  the  British  working  classes  could  obtain  them  in 
abundant  quantities  and  cheaply.  It  may,  therefore,  be 
difficult  to  convince  them  that  whatever  evils  are  at  present 
experienced  by  agriculturists  in  this  and  other  protection- 
ist countries  would  have  been  intensified  had  the  entire 
energies  of  protectionist  peoples  been  devoted  to  the  produc- 
tion of  the  rude  products  of  the  soil.  But  the  sufferer  from 
overproduction  is  more  amenable  to  argument.  If.  under 
the  present  system,  which  the  Cobdenites  assert  is  repressive 
in  its  character,  the  farmers  of  this  and  other  countries  pro- 
duce in  such  abundance  that  their  chief  concern  is  to  find 
a  profitable  market,  what  would  have  been  the  result  had  the 
millions  now  forming  the  urban  population  of  the  United 
States,  and  whose  immediate  dependence  for  a  livelihood  is 
upon  manufacturing  industries,  turned  their  attention  to 
the  cultivation  of  the  soil  ? 

The  Cobdenite  has  airily  assumed  that  the  agriculturalist 
in  such  case  would  have  found  his  compensation  in  a  greatly 
reduced  cost  of  the  manufactured  products  consumed  by  him, 
but  the  evidence  advanced  in  a  preceding  chapter,  that  so 
long  as  Great  Britain  enjoyed  a  practical  monopoly  of  the 
trade  in  manufactured  articles  there  was  no  disposition  to 
share  her  prosperity  with  other  peoples,  forbids  the  assump- 
tion that  any  such  result  would  have  followed.  There  is  no 
fact  better  attested  tlian  that  the  aim  of  the  Cobdenites  was 


AGRICULTURE  199 

narrowly  selfish.  The  British  believed  that  the  true  com- 
mercial policy  of  their  nation  was  to  buy  in  the  cheapest 
and  sell  in  the  dearest  market,  and  it  was  their  purpose  to 
make  their  manufactured  products  as  dear  as  possible  to 
outsiders  by  preserving  as  close  a  monopoly  as  practicable, 
while  at  the  same  time  they  aimed  to  secure  their  supplies 
of  food  stuffs  and  raw  materials  cheaply  by  pitting  nations 
with  agricultural  capabilities  against  each  other. 

The  economists  of  a  country  are  apt  to  take  on  the  color 
of  their  surroundings.  It  is  not  surprising,  therefore,  that 
in  the  first  flush  of  the  discovery  by  Britons  that  it  would  be 
conducive  to  the  national  prosperity  if  Great  Britain  could 
be  made  the  workshop  of  the  world  to  find  ingenious  men 
framing  subtle  arguments  designed  to  convince  backward 
peoples  that  their  true  interests  would  be  forwarded  by 
remaining  in  a  state  of  dependence.  Such  arguments  fre- 
quently took  the  form  of  demonstrations  that  agriculture 
must  of  necessity  be  retarded  in  new  countries  if  capital  was 
diverted  from  what  those  who  formulated  them  declared 
must  be  its  most  profitable  employment,  namely,  in  aiding 
the  production  of  food  and  raw  materials,  to  manufacturing, 
which  they  emphatically  asserted  could  never  be  successfully 
and  profitably  pursued  unless  it  developed  itself  naturally. 

This  fundamental  error  of  the  Manchester  school  is  due 
to  a  slavish  adherence  to  the  teachings  of  Adam  Smith, 
whose  mind  was  permeated  with  the  idea  that  capitals  are 
created  with  infinite  difficulty  and  who  sometimes  spoke  as 
though  he  imagined  that  the  limit  of  their  creation  had  been 
reached'  at  the  time  he  wrote.  It  is  clear  that  Smith  did; 
not  foresee  that  what  was  once  esteemed  so  difficult  would,  a 
few  years  after  his  death,  be  achieved  with  ease.  Had  he 
dreamed  of  the  tremendous  expansion  of  capital  that  has  oc- 
curred since  the  middle  of  the  present  century  and  of  the 
great  mobility  that  would  be  imparted  to  it  by  improved 
methods  of  transportation  and  communication  he  would  not 
have  ventured  to  assert  that  "no  regulation  of  commerce  can 


200         PROTECTION    AND   PROGRESS 

increase  the  quantity  of  industry  in  any  society  beyond  what 
its  capital  can  maintain.  It  can  only  divert  a  part  of  it  in  a 
direction  into  which  it  might  otherwise  not  have  gone,  and 
it  is  by  no  means  certain  that  this  artificial  direction  is  likely 
to  be  more  advantageous  to  the  society  than  that  into  which 
it  would  have  gone  on  its  own  account."* 

There  was  hardly  any  excuse  for  this  assumption  that 
capital  was  so  scarce  that  its  employment  in  a  stimulated 
industry  must  necessarily  have  been  regarded  as  a  diversion 
even  in  the  time  when  Smith  wrote.  In  another  connection 
he  informs  us  that :  "The  mercantile  capital  of  Holland  is 
so  great  that  it  is  continually  overflowing,  sometimes  into 
the  funds  of  foreign  countries,  sometimes  into  loans  to  pri- 
vate traders  and  adventurers  of  foreign  countries,  some- 
times into  the  most  roundabout  foreign  trades  of  consump- 
tion and  sometimes  into  the  carrying  trade.  All  near  em- 
ployments being  filled  up,  all  the  capital  which  can  b'j  placed 
in  them  with  any  tolerable  profit  being  already  placed  in 
them,  the  capital  of  Holland  necessarily  flows  towards  the 
most  distant  employments."t 

A  moment's  reflection  will  convince  any  one  that  if  the 
condition  here  described  existed  Holland  might  have  invested 
a  portion  of  its  surplus  capital  in  a  new  country.  It  is  quite 
certain  that  the  Dutch  would  not  have  been  deterred  from 
engaging  in  a  venture  in  the  colonies  which  promised  profit 
no  matter  to  what  it  may  have  owed  its  origin ;  and  it  is 
equally  certain  that  had  they  done  so  the  employment  of 
their  capital  in  promoting  a  stimulated  enterprise  would 
not  have  constituted  a  diversion,  for  Smith  expressly  states 
that  the  Hollanders  were  compelled  to  seek  new  fields  for 
investment.  Under  the  circumstances,  it  is  easy  to  conceive 
of  the  development  of  a  manufacturing  industry  in  a  new 
country  with  insufficient  capital  of  its  own  without  in  the 


♦Smith,  Wealth  of  Nations,  Book  IV,  Chap.  I. 
tibid,   Book  IV,   Chap.   VII. 


AGRICULTURE  201 

least  retarding  its  agricultural  development  by  diverting 
from  it  the  capital  necessary  for  its  expansion. 

That  agriculture  has  never  suffered  from  the  diversion 
of  capital  to  other  pursuits  in  this  country  is  easily  estab- 
lished. Indeed,  it  would  not  be  difficult  to  demonstrate  that 
the  creation  of  a  manufacturing  industry  by  a  resort  to  pro- 
tection, insead  of  depriving  the  people  of  the  country  of 
the  opportunity  of  developing  the  capabilities  of  the  soil, 
has  actually  promoted  that  result.  There  can  hardly  be 
any  question  that  the  extension  of  the  American  railway 
system,  which  has  done  so  much  to  open  up  vast  regions  of 
great  fertility,  is  in  large  part  due  to  the  prosperity  of  the 
manufacturing  industry,  the  surplus  earnings  of  wdiich  have 
found  their  way  into  transportation  enterprises.  Had  a 
manufacturing  industry  not  been  created,  had  the  American 
people  chosen  to  remain  mere  producers  of  rude  products,  the 
railway  system  of  the  United  States  could  not  have  attained 
its  present  proportions.  No  strictly  agricultural  country 
could  support  such  a  system.  It  required  that  interdepend- 
ence which  results  from  the  proximity  of  field  and  factory 
to  bring  about  that  constant  tendency  to  extend  the  railroad 
facilities  of  the  country  which  has  done  so  much  to  make 
the  United  States  the  leading  agricultural  nation  of  the 
world. 

This  is  no  idle  claim.  It  rests  on  figures  of  production 
which  admit  of  no  other  deduction.  Mulhall  asserts  in  the 
most  positive  manner  that  no  nation  begins  to  approach  the 
United  States  in  the  magnitude  of  its  agricultural  produc- 
tions, and,  what  is  of  more  consequence  to  this  discussion, 
he  concedes  that  this  country  has  beyond  all  others  made  the 
best  use  of  its  opportunities.  Speaking  of  the  period  be- 
tween the  repeal  of  the  corn  laws  and  1895,  he  says:  "The 
growth  of  American  agriculture  in  half  a  century  has  been 
unparalleled  in  any  age  or  nation."* 

♦Mulhall,   Industries   and  Wealth   of   Nations,    1896. 


202         PROTECTION   AND   PROGRESS 

It  is  evident  from  this  testimony  that  the  agricultural 
development  of  the  United  States  was  not  interfered  with 
by  the  simultaneous  development  of  a  manufacturing  indus- 
try on  American  soil.  On  the  contrary,  it  implies  that  the 
diversification  of  industries  proved  a  stimulus  to  farming 
and  that  the  protective  system  was  chiefly  responsible  for 
the  enormous  expansion  in  the  different  fields  of  agricultural 
production  to  be  noted  later  on. 

Protection  also  affords  an  explanation  of  the  fact  re- 
marked by  Mulhall  that  "there  has  been  such  an  improve- 
ment of  agricultural  machinery  of  late  years  in  the  United 
States  that  the  area  of  cultivation  per  farming  hand  rose 
from  thirty-two  acres  in  1870  to  thirty-seven  in  1880."  This 
advance  was  directly  due  to  the  development  of  the  mechan- 
ical faculty  among  the  American  people.  Had  the  United 
States  devoted  itself  exclusively  to  agriculture  the  backward 
condition  observable  throughout  the  Southern  States  before 
the  recent  manufacturing  awakening  in  that  section  must 
have  prevailed  generally  throughout  the  Union. 

If  we  turn  to  the  statistics  of  the  Patent  Office  of  the 
United  States  we  find  that  the  proportion  of  inventions 
credited  to  the  South  during  the  ante-bellum  period  was 
very  small,  and  a  detailed  examination  of  the  matter  would 
show  that  the  inventive  faculty  was  almost  dormant  in  those 
sections  of  the  country  which  devoted  themselves  wholly 
to  agricultural  pursuits. 

In  an  interesting  sketch  of  the  development  of  Agricul- 
tural Machinery  and  Implements  in  the  United  States,  by 
Eldridge  M.  Fowler*  we  find  abundant  evidence  of  the  bene- 
ficial effects  of  the  proximity  of  a  manufacturing  industry 
to  American  fields.  No  one  can  read  the  article  referred  to 
without  being  impressed  with  the  fact  that  the  advance  of 
the  agricultural  interest  in  the  United  States  owes  more  to 
the  intelligent  assistance  rendered  by  men  with  the  mechan- 


*One  Hundred  Years  of  American  Commerce,  Vol.  II,  p.  35^- 


AGRICULTURE  .   203 

ical  turn  of  mind  who  had  their  training  in  the  machine 
shops  and  factories  of  the  country  than  to  the  efforts  of 
the  farmers  themselves.  The  figures  showing  the  enormous 
extent  of  the  branch  of  manufacturing  devoted  to  the  pro- 
duction of  agricultural  machinery  and  implements  are  in 
themselves  sufficient  to  establish  the  claim  that  in  the  United 
States  the  machine  shop  is  the  strong  right  arm  of  the 
farmer.  In  1890  there  were  910  establishments  specified  in 
the  Government  Bulletin  as  reporting  themselves  as  wholly 
devoted  to  the  manufacture  of  agricultural  machinery  and 
implements.  These  concerns  reported  an  aggregate  capital 
of  $145,313,997,  employed  39,380  hands  and  paid  wages  in 
the  census  year  to  the  amount  of  $17,652,162,  the  value  of 
the  product  of  their  industry  being  $81,271,651. 

In  the  year  to  which  these  figures  relate  the  number  of 
farms  in  the  United  States  was  4,564,641,  with  an  acreage  of 
623,218,619,  valued  at  $13,279,252,649.  The  farmers  tilling 
this  vast  area  were  the  possessors  of  agricultural  machinery 
valued  at  $494,247,647,  this  amount  representing  an  increase 
of  21  per  cent,  in  such  holdings  in  ten  years. 

A  study  of  these  statistics  helps  us  to  understand  the 
enormous  impulse  given  to  agriculture  during  the  past  half 
century  in  the  United  States  and  enables  us  to  realize  why 
"the  grain  crop  of  1895  (in  this  country)  was  equal  to  eight 
tons  per  hand  employed  in  farming,  compared  with  an  aver- 
age of  only  two  tons  per  hand  in  Europe."  Mulhall,  who 
makes  this  statement,  says  distinctly  that  "the  superiority  of 
the  American  agriculturist  is  due  to  improved  machinery," 
and  his  view  is  concurred  in  by  Fowler,  who  remarks  that 
"by  the  aid  of  the  wonderful  implements  designed  for  his 
use  the  American  farmer  has  within  the  last  half  century 
been  enabled  to  increase  the  effective  force  of  labor  fully 
20  per  cent.,  which  means  an  annual  net  gain  to  the  agricul- 
tural community  of  probably  not  less  than  $200,000,000."* 

♦One  Hundred  Years  of  American  Commerce,  Vol.  II,  p.  356. 


204         PROTECTION   AND   PROGRESS 

It  would  not  be  difficult  to  establish  to  the  satisfaction 
of  reasonable  persons  that  these  remarkable  achievements 
of  American  agriculture  could  not  have  been  accomplished 
had  the  people  of  the  United  States  been  satisfied  to  depend 
upon  foreigners  for  their  supplies  of  manufactured  articles. 
It  is  inconceivable  that  the  numerous  valuable  machines  now 
in  use  on  every  American  farm  would  have  been  called  into 
existence  had  not  the  needs  of  the  American  farmer  been 
studied  at  close  range  by  American  mechanics.  The  curious 
who  care  to  inquire  into  such  matters  will  speedily  discover 
that  nearly  every  important  agricultural  machine  invented 
in  this  country  owes  its  existence  to  the  promptings  of  the 
mechanical  mind  and  the  disposition  of  those  inclined  to  in- 
vention to  study  out  methods  of  profiting  by  the  faculty, 
and  not  to  any  demand  or  suggestion  made  by  the  agricul- 
tural classes.  There  is,  therefore,  no  ground  for  the  belief 
that  the  condition  of  agriculture  in  the  United  States  would 
have  been  more  advanced  than  in  Europe  had  Cobdenism 
prevailed. 

Mulhall  says :  "If  the  economy  of  labor  was  as  well  un- 
derstood in  all  countries  as  in  the  United  States,  where  each 
hand  cultivates  twenty-one  acres,  the  tilled  area  of  Europe 
would  be  two  and  one-half  times  as  great  as  it  is."*  The 
compliment  conveyed  in  this  remark  is  appreciated  by  Amer- 
icans, but  it  would  be  an  exhibition  of  egotism  and  vanity 
to  assume  that  the  fact  cited  indicates  the  superiority  of 
the  agricultural  class  in  this  country  over  that  of  similar 
classes  in  Europe.  There  is  not  the  slightest  .doubt  as  to  the 
real  cause,  and  it  is  the  one  already  referred  to. 

Had  tlie  American  people  remained  in  a  state  of  depend- 
ency such  as  the  devotion  to  agricultural  would  have  in- 
volved, they  would  probably  be  farming  on  lines  not  more 
advanced  tlian  those  marking  European  cultivation.  There 
is  every  reason  to  believe  that  if  we  were  a  purely  agricul- 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


AGRICULTURE  205 

tural  community  the  British  manufacturer  at  long  range 
would  study  the  needs  of  the  country  precisely  as  he  does 
those  of  the  agricultural  people  of  Central  and  South  Amer- 
ica. The  extent  of  this  study  is  to  determine  as  nearly  as 
possible  what  the  prejudices  of  a  people  are  and  to  meet  the 
demand  for  their  continuance.  It  is  a  notorious  fact  that 
this  is  the  method  pursued  by  Germany  and  Great  Britain 
in  catering  for  the  trade  referred  to.  If  a  people  are  accus- 
tomed to  carrying  on  their  occupations  with  cumbersome 
tools  which  might  easily  be  replaced  with  lighter  and  better 
implements  no  attempt  is  made  to  bring  about  the  latter 
result.  On  the  contrary,  all  the  boasted  ingenuity  of  the  for- 
eign artisan  is  devoted  to  supplying  just  such  tools  as  the 
people  have  been  using,  thus  assisting  in  the  perpetuation  of 
habits  calculated  to  produce  a  minimum  of  beneficial  results 
to  mankind.  If  anyone  doubts  this  let  him  study  the  con- 
sular reports  of  the  British  and  observe  how  much  stress  is 
laid  upon  the  necessity  of  catering  to  the  prejudices  of  for- 
eigners and  of  not  attempting  to  force  on  them  tools  and 
machinery  to  which  they  are  unaccustomed. 

It  is  only  because  the  farm  in  the  United  States  has  been 
encroached  upon  by  the  factory  that  a  different  result  is 
noticeable.  The  manufacturer  has  not  permitted  the  farmer 
to  remain  in  a  groove.  Self-interest  has  impelled  him  to 
offer  his  services  to  the  tiller  of  the  soil  who  would  have 
indefinitely  pursued  the  methods  of  his  ancestors.  The  His- 
tory of  invention  will  show  that  the  occasions  are  extremely 
rare  in  which  the  quality  asserts  itself  among  strictly  agri- 
cultural peoples.  It  required  communities  in  which  mechan- 
ical ingenuity  and  skill  are  highly  developed,  situated  in  the 
midst  of  great  fertile  areas,  to  help  produce  such  results  as 
have  been  achieved  in  the  United  States  by  American  farm- 
ers. 

Had  these  manufacturing  communities  not  been  called 
into  existence  by  a  protective  tariff  American  agriculture 
would  be  as  plodding  and  unprogressive  as  it  is  in  other  parts 


2o6         PROTECTION   AND   PROGRESS 

of  the  world.  That  mterdependence  which  Spencer  has  told 
us  accomphshes  so  much  for  mankind  has  been  the  great  fac- 
tor in  our  agricultural  progress,  and  the  attempt  to  diversify 
our  industries  by  artificially  aiding  them  is  responsible  for 
its  growth  in  this  country.  Had  there  been  no  resort  to 
protection  the  American  people  might  have  remained  homo- 
genous and  unenterprising,  and  instead  of  enjoying  the  ad- 
vantages which  flow  from  that  complexity  of  civilization 
which  is  the  distinguishing  feature  of  interdependence  the 
United  States  might  be  as  dependent  as  Turkey  or  a  Central 
American  State. 

Recurring  now  to  the  argument  of  the  Cobdenite  that  the 
inevitable  tendency  of  protection  is  to  impede  the  growth 
of  that  particular  industry  for  which  a  country  is  best 
fitted  by  nature,  let  us  see  whether  the  alleged  economic 
blunder  of  protection  has  operated  disastrously  to  agricul- 
ture in  the  typical  protectionist  country — the  United  States. 
It  has  always  been  held  by  the  writers  of  the  Manchester 
school  that  the  interests  of  the  United  States  would  have 
been  best  subserved  by  a  strict  devotion  to  the  production  of 
food  products  and  raw  materials.  As  distinguished  an  ex- 
ponent of  free  trade  as  Mr.  Gladstone,  in  a  discussion  with 
James  G.  Blaine  carried  on  in  the  pages  of  an  American 
review,  actually  took  the  ground  that  a  resort  to  protection 
conclusively  demonstrated  that  our  manufacturing  indus- 
tries were  exotics,  and  painted  a  glowing  picture  of  what 
we  might  have  accomplished  if  we  had  devoted  ourselves 
exclusively  to  pursuits  for  which  Americans  and  their  coun- 
try were  better  fitted. 

Acute  as  the  intellect  of  this  remarkable  Englishman  un- 
doubtedly was,  his  mind  had  been  so  warped  by  the  teachings 
of  Cobdenism  that  he  committed  the  absurd  blunder  of 
likening  the  American  attempt  to  encourage  home  manufac- 
tures to  the  effort  to  raise  pineapples  under  glass  in  compe- 
tition with  the  producers  of  the  tropics.  It  is  true  that  when 
Mr.  Gladstone  used  the  illustration  to  which  we  refer  he 


AGRICULTURE  207 

admitted  that  he  was  carrying  the  argument  to  extremes, 
but  he  clearly  showed  that  he  believed  that  the  attempt  to 
create  an  iron  industry  in  competition  with  that  of  Great 
Britain  was  as  absurd  as  it  would  be  for  Englishmen  to  try 
to  raise  pineapples  in  hothouses.  "A  pineapple,"  he  said, 
"is  now  sold  in  London  for  eight  shillings  and  six  pence 
which  before  we  imported  that  majestic  fruit  would  have 
sold  for  two  pounds.  Why  not  protect  the  grower  of  pine- 
apples at  two  pounds  by  a  duty  of  400  per  cent?  Do  not 
tell  me,"  he  added,  "that  this  is  ridiculous.  It  is  ridiculous 
upon  my  principles;  but  upon  your  principles  it  is  allow- 
able ;  it  is  wise,  it  is  obligatory — as  wise,  shall  I  say  ?  as  to 
protect  cotton  fabrics  by  a  duty  of  50  per  cent.  No ;  noj:  as 
wise  only,  but  even  more  wise,  and  therefore,  even  more 
obligatory.  Because  according  to  this  argument  we  ought 
to  aim  at  the  production  within  our  own  limits  of  those  com- 
modities which  require  the  largest  expenditure  of  capital 
and  labor  to  rear  them  in  proportion  to  the  quantity  pro- 
duced ;  and  no  commodity  could  more  amply  fulfill  this  con- 
dition."* 

These  views  were  expressed  by  Mr.  Gladstone  in  the  first 
month  of  the  year  1890  and  were  directed  at  the  United 
States,  and  were  supposed  to  fortify  his  contention  that  pro- 
tection resulted  in  diverting  capital  from  more  profitable 
pursuits.  He  said  in  a  paragraph  closely  following  the 
above :  "I  shall  boldly  contend  that  the  whole  of  this  doc- 
trine— that  capital  should  be  tempted  into  an  area  of  dear 
production  for  the  sake  or  under  the  notion  of  keeping  it 
at  home — is  a  delusion  from  top  to  bottom,"  and  in  another 
place,  in  the  same  connection,  he  remarked  :  "Protection  says 
to  a  producer.  Grow  this  or  manufacture  that  at  a  greater 
necessary  outlay,  though  we  might  obtain  it  more  cheaply 
from  abroad,  where  it  can  be  produced  at  a  smaller  necessary 
outlay." 

♦Gladstone,  North  American  Review,  Article,  "Free  Trade,"  Janu- 
ary, 1890. 


2o8         PROTECTION   AND   PROGRESS 

It  is  a  harsh  assertion  to  make,  but  there  can  be  no  doubt 
whatever  that  in  these  and  the  foregoing  passages  Mr.  Glad- 
stone deHberately  misrepresented  the  purposes  and  practices 
of  protectionists.  He  was  perfectly  familiar  with  American 
tariff  schedules  and  he  must  have  known  that  they  embraced 
a  large  number  of  articles  on  the  free  list,  and  these  exempted 
things  he  knew  were  not  taxed  because  our  lawmakers  rec- 
ognized that  a  tax  imposed  on  an  article  we  are  incapable 
of  producing  must  necessarily  fall  on  the  consumer  and  that 
home  industry  would  not  be  encouraged  by  such  an  imposi- 
tion. He  must  also  have  been  familiar  with  the  fact  that 
protection  is  only  accorded  to  such  things  as  there  is  a 
rational  ground  for  believing  we  can  eventually  produce  as 
cheaply  as  similar  articles  can  be  produced  in  other  countries. 

If  Gladstone  did  not  know  this  his  ignorance  was  unpar- 
donable, for  the  debates  in  Congress  over  the  various  tariff 
schedules  invariably  revolved  around  the  question  whether 
the  article  seeking  protection  was  of  such  a  nature  that  its 
production  on  a  sufficient  scale  to  meet  the  demands  of  the 
home  market  was  assured.  In  the  Congress  following  the 
appearance  of  Mr.  Gladstone's  article  in  the  North  American 
Review  the  duty  was  removed  from  sugar  at  the  instance 
of  protectionists,  who  had  become  convinced  that  it  could 
or  would  not  be  produced  on  a  sufficient  scale  to  warrant 
making  it  the  object  of  a  protective  duty.  It  w-as  only  after 
the  conviction  was  reached  as  the  result  of  experiments  in 
offering  bounties  to  beet  sugar  producers  that  there  would 
be  no  difficulty  about  the  United  States,  with  a  proper  degree 
of  encouragement,  producing  all  the  sugar  it  needed  that  the 
country  consented  to  a  restoration  of  a  duty  which,  under 
other  circumstances,  would  have  been  as  obnoxious  to  the 
protectionist  idea  as  the  imposition  of  a  tariff  on  tea  or 
coffee,  both  of  which  go  untaxed  because  no  American  be- 
lieves that  they  can  be  profitably  produced  in  the  Un'ted 
States.* 

*A  duty  was  imposed  on  tea  as  a  war  measure  in  1898. 


AGRICULTURE  209 

Later  on  additional  evidence  will  be  furnished  to  prove 
that  Mr.  Gladstone  was  short  sighted  and  narrow  minded 
when  he  assumed  that  protection  would  result  in  the  infliction 
of  permanent  dearness  upon  a  country  of  great  resources ; 
here  the  purpose  is  merely  to  exhibit  as  conclusively  as,  pos- 
sible that  there  was  no  diversion  of  capital  from  the  agri- 
cultural industry  in  the  United  States  during  the  period  since 
protection  has  had  full  sway,  but  that  it  would  have  been 
a  pecuniary  gain  to  the  country  if  such  a  diversion  as  he 
assumes  did  occur  had  really  taken  place.  This  demonstra- 
tion will  be  by  means  of  figures  which  show  that  the  increase 
of  production  in  the  United  States  has  never  been  paralleled 
in  ancient  or  modern  times,  and  that  it  has  resulted  in  a 
disastrous  overproduction  which  might  have  been  averted 
had  the  policy  of  protection  not  halted  in  the  years  anterior 
to  the  Civil  War.  In  other  words,  had  manufacturing  not 
been  discouraged  by  the  slave-holding  oligarchy  in  the  40's 
and  50's,  the  non-agricultural  population  of  the  United 
States  would  have  increased  at  such  a  rate  that  the  products 
of  our  farms  would  have  been  easily  absorbed  by  people 
living  on  our  own  soil  and  we  should  not  have  had  a  surplus 
to  embarrass  the  farmer  by  reducing  the  prices  of  the  com- 
modities he  has  to  sell. 

Let  us  now  glance  at  some  of  the  achievements  in  that 
industry  which  Mr.  Gladstone  assumes  was  injured  by  a 
diversion  of  capital,  and  incidentally  compare  what  has  been 
accomplished  in  this  country  with  what  has  been  effected 
by  Europeans.  In  1840  the  United  States  produced  2,100,- 
000  tons  of  wheat;  in  1895  the  quantity  had  increased  to 
11,700,000  tons;  of  maize  we  raised  9,500,000  tons  in  1840 
and  53,800,000  in  1895.  The  yield  of  oats  in  1840  was 
3,800,000  tons,  in  1895  it  had  reached  23,900,000  tons.  In 
1850  we  had  34,200,000  acres  devoted  to  grain ;  in  1895  the 
cultivating  grain  area  was  149,950,000.  In  1850  there  were 
6,100,000  acres  under  cotton  ;  in  1895  there  were  23,740,000. 
Our  meadows  increased  from  11,050,000  acres  in  1850  to 

14 


210         PROTECTION   AND   PROGRESS 

51,800,000  in  1895.  The  increase  of  our  flocks  and  herds 
is  equally  great.  We  had  17,800,000  cattle,  21,700,000  sheep, 
30,400,000  pigs  and  4,900,000  horses  in  1850,  and  in  1894 
these  vast  numbers  had  expanded  to  53,100,000  cattle,  45,- 
000*000  sheep,  45,200,000  pigs  and  18,400,000  horses. 

A  survey  of  these  figures  impels  Mulhall,  from  whose 
work  they  are  derived,  to  remark :  "But  for  the  great  de- 
velopment of  tillage  and  pastoral  industry  in  the  United 
States  some  European  countries,  especially  England,  would 
come  short  of  grain  and  meat,"  and  to  this  statement  he  adds 
that  "at  present  the  United  States  raises  one-third  of  the  food 
produced  in  the  world,"  the  comparative  production  stated 
in  terms  of  tons  being  as  follows : 

United  States.       Europe.       Other  countries. 

Grain 89,400,000  141,500,000         23,300,000 

Wheat 4,830,000  9,380,000  1,290,000 

It  is  certainly  impossible  to  infer  from  this  showing  that 
agriculture  has  been  repressed  in  the  United  States.  Tht 
development  has  been  phenomenal,  the  production  during 
the  whole  protective  period  being  vastly  in  excess  of  the 
home  requirements.  According  to  Mulhall  "about  one-sixth 
of  the  agricultural  products  of  the  United  States  are  ex- 
ported, as  shown  by  the  customs  resturns,  from  which  fact 
it  may  be  asserted  that  1,800,000  persons  are  exclusively 
occupied  (in  the  United  States)  in  producing  food  for  ex- 
portation to  Europe."  He  then  furnishes  the  following 
table,  which  shows  in  an  unmistakable  manner  that  the  ag- 
ricultural production  of  the  United  States  has  more  than 
kept  pace  with  the  growth  of  population  and  that  the  Ameri- 
can farmer  has  constantly  experienced  the  drawbacks  result- 
ing from  overproduction : 

Million  £  s ; 

1840.   i860.   1880.  1886.   1893. 

Exported  19     53    143    loi    128 

Home  use 161    367    556    674    685 

Totals 180    420    699    775    813 


AGRICULTURE  211 

In  the  face  of  a  development  such  as  that  exhibited  by 
these  figures  it  is  almost  grotesque  to  speak  of  a  diversion 
of  capital  from  agricultural  pursuits.  The  truth  of  the 
matter  is  that  the  United  States  has  handicapped  itself  by 
developing  its  agricultural  resources  too  rapidly.  If  there 
were  any  doubts  on  this  point  they  would  be  prom.ptly  dis- 
pelled by  an  attentive  consideration  of  the  recommendations 
of  the  trade  journals  that  the  production  in  the  cotton  grow- 
ing region  should  be  curtailed,  or  that  the  farmers  engaged 
in  this,  that  or  the  other  branch  of  agriculture  would  be 
wise  to  diversify  or  change  their  crops.  Observation  of 
the  fact  that  the  constant  expansion  of  agricultural  opera- 
tions has  the  effect  of  depressing  prices  might  also  lead  to 
the  conclusion  that  if  there  is  unwisdom  in  this  connection 
it  is  not  of  the  kind  mentioned  by  Mr,  Gladstone,  but  some- 
thing entirely  different. 

Agriculture  in  the  United  States  has  not  been  impeded ; 
it  has  been  overdone.  It  appears,  however,  that  the  econo- 
mists of  the  Manchester  school  who  profess  to  see  in  pro- 
tection the  cause  for  the  overproduction  of  manufactured 
articles,  and  who  regard  such  overproduction  as  a  great  evil, 
do  not  look  upon  agriculture  from  the  same  point  of  view. 
On  the  contrary,  they  extol  as  a  blessing  the  cheapening  of 
food  which  results  from  the  excessive  competition  of  farmers 
and  calmly  assume  that  the  question  whether  the  tiller  of 
the  soil  is  to  be  properly  rewarded  for  his  exertions  is  one 
scarcely  worth  paying  attention  to.  Indeed,  in  England  the 
interests  of  the  agricultural  producer  have  been  entirely 
disregarded,  and  in  the  effort  to  intrench  the  manufacturing 
industry  of  the  country  British  statesmen  have  proceeded 
to  such  extremes  that  critics,  not  unfriendly  to  the  free  trade 
theory,  have  questioned  whether  in  their  anxietv  to  main- 
tain the  supremacy  attained  by  adventitious  circumstances 
they  are  not  imperiling  the  existence  of  the  nation. 

It  is  but  recently  that  this  phase  of  the  economic  question 
has  received  attention  in  Great  Britain,  and  it  is  approached 


212         PROTECTION   AND   PROGRESS 

with  reluctance  by  the  men  who  teach  the  youth  of  the  coun- 
try. The  latter  are  still  influenced  by  the  apprehension  that 
they  may  be  convicted  of  economic  heresy  if  they  tell  the 
truth.  But  the  practical  men  at  the  head  of  the  British 
trade  journals  do  not  hesitate  to  point  out  the  difficulties 
created  by  the  one-sided  development  of  industry  in  the 
United  Kingdom  and  say  plainly  that  a  condition  of  affairs 
exists  which  in  certain  contingencies  may  prove  destructive 
to  the  national  welfare.  In  an  elaborate  article  discussing  the 
sources  of  British  food  supplies,  a  leading  London  journal 
has  pointed  out  some  of  the  drawbacks  resulting  from  an 
economic  system  which  has  obliged  Great  Britain  to  depend 
upon  foreigners  for  73.5  per  cent,  of  the  breadstuffs  con- 
sumed in  that  country.* 

1.  It  imposes  heavy  taxes  on  the  people  of  the  United 
Kingdom  for  the  maintenance  of  extra  cruisers  for  the  pro- 
tection of  cargoes. 

2.  It  renders  possible  a  coalition  of  the  principal  foreign 
states  supplying  us  with  wheat,  who,  by  withholding  their 
exports,  could  render  even  the  largest  fleet  useless  and  dic- 
tate their  terms  to  us  after  a  short  period  of  starvation  in 
England,  the  supplies  in  stock  being  only  sufficient  to  meet 
our  wants  for  a  few  weeks. 

3.  It  deprives  the  home  manufacturer  of  a  valuable  mar- 
ket for  his  production  close  at  hand- 

4.  It  destroys  the  best  recruiting  ground  and  the  dis- 
tricts best  calculated  to  maintain  the  physique  of  our  defen- 
sive forces. 

5.  It  destroys  a  class  of  the  population  from  which  the 
best  town  folk  has  been  largely  drawn ;  it  takes  from  the 
middle  classes  the  source  from  which  their  servants  were 
obtained ;  it  practically  abolishes  the  class  of  most  value  as 
emigrants  to  British  colonies,  who  have  now  to  be  drawn 
from  the  continent. 

*"The  British  Bread  Basket,"  British  Trade  Journal,  March,  1898. 


AGRICULTURE  213 

These  are  formidable  charges  to  bring  against  a  system 
whose  advocates  are  constantly  proclaiming  that  protection 
results  in  impeding  the  natural  growth  of  a  country,  and 
who,  by  implication,  assume  that  open  ports  must  neces- 
sarily prevent  any  industry  being  placed  at  a  disadvantage 
because  the  completest  freedom  is  permitted  to  all  industries. 
It  does  not,  however,  require  much  penetration  to  discover 
that  there  are  more  modes  of  artific'ally  stimulating  the 
manufacturing  industry  of  a  country  than  those  resorted 
to  by  protectionists.  The  critic  quoted  from  above,  points 
out  the  British  method  when  he  speaks  of  the  heavy  taxes 
imposed  on  the  people  of  the  United  Kingdom  for  the  main- 
tenance of  extra  cruisers  for  the  protection  of  cargoes  of 
food  stuffs  in  transit  to  Great  Britain.  He  might  have  fairly 
included  in  his  arraignment  the  cost  of  maintaining  the 
major  part  of  the  British  fleet  which  during  the  past  fifty 
years,  ever  since  the  acceptance  of  the  peace  producing  sys- 
tem of  Cobden,  had  been  sailing  around  the  world  com- 
pelling people  at  the  cannon's  mouth  to  freely  (?)  trade 
with  the  merchants  of  England. 

It  is  amazing  that  writers  living  in  a  country  whose  eco- 
nomic system  has  brought  about  the  condition  above  de- 
scribed should  have  the  temerity  to  intimate  that  the  pro- 
tective system  of  the  United  States  has  acted  injuriously  to 
the  agricultural  interest,  but  it  is  a  characteristic  of  the 
followers  of  the  Manchester  school  that  they  pursue  their 
theories  to  their  logical  conclusions  and  never  take  the 
trouble  to  ask  themselves  whether,  when  the  result  in  practice 
fails  to  harmonize  with  the  one  which  their  theory  calls  for, 
they  may  not  have  been  arguing  from  false  premises.  Hav- 
ing assumed  that  artificial  aid  rendered  to  a  manufacturing 
industry  in  a  new  country  necessarily  implies  the  diversion 
of  capital  from  agriculture,  they  insist  that  the  results  of 
protection  must  be  disastrous  to  the  agricultural  industry. 
The  idea  that  the  capital  employed  in  the  aided  industry  may 
be  drawn  from  some  other  source  than  the  country  which 


2i4         PROTECTION   AND  PROGRESS 

resorts  to  the  artificial  method  never  occurs  to  them ;  nor 
do  the  most  acute  among  the  school  of  thinkers  referred  to 
realize  that  in  a  country  of  vast  resources  the  creation  of 
capital  is  a  rapid  process,  and  that  in  comparatively  young 
communities  there  is  more  frequently  a  plethora  than  a 
scarcity  of  the  means  to  promote  production.  Or,  to  put  it 
in  another  way,  the  development  of  agriculture  in  a  new 
country  is  apt  to  proceed  more  rapidly  than  the  capacity  of 
people  to  effectively  consume  its  products. 

While  there  is  absolutely  no  proof  to  support  the  conten- 
tion that  protection  represses  agriculture,  the  fact  that  Cob- 
denism  has  had  a  tendency  to  impede  the  development  of 
British  agriculture  is  undeniable.  According  to  the  best 
available  statistics  there  were  21,930,000  acres  under  crops 
in  1846  in  the  United  Kingdom  against  20,050,000  in  1895. 
In  the  former  year  the  production  of  British  grain  was  con- 
siderably greater  than  at  present,  there  being  11,600,000 
acres  cultivated  in  cereals  in  1846  as  against  8,870,000  in 
1895.  During  the  same  period  there  was  a  slight  increase  in 
the  acreage  devoted  to  green  crops,  from  10,330,000  to  11,- 
180,000  acres,  and  of  pasturage  from  22,940,000  to  27,830,- 
000  acres,  but  this  advance  is  insignificant  when  the  enor- 
mous expansion  of  population  during  the  interval  is  con- 
sidered. In  the  opening  year  of  the  free  trade  era  Great 
Britain  was  no  longer  self-dependent.  But  after  that  date 
she  was  obliged  to  increase  her  imports  of  food  stufifs  enor- 
mously. Her  annual  takings  of  foreign  breadstuffs 
amounted  in  1895  to  £52,732,697;  of  meat  products,  £24,- 
750,000;  of  butter  and  margarine,  £17,842,508;  of  live  an- 
imals, £10,438,000;  cheese,  £4,900,000 ;  eggs,  £4,184,567. 

The  Cobdenite  contention  that  it  is  an  economic  gain  to 
buy  the  articles  procured  by  the  vast  expenditures  described 
above  in  the  cheapest  market  would  command  more  respect 
if  there  were  no  other  considerations  involved  than  those 
which  they  obtrusively  put  in  the  foreground;  but  if  there 
is  any  foundation  for  the  fears  betrayed  in  the  above  recapit- 


AGRICULTURE  215 

ulation  of  the  drawbacks  of  depending  upon  foreigners  for 
food  supplies  it  will  be  admitted  that  the  accomplishment 
of  Cobdenism  somewhat  resembles  that  of  the  monkey  whose 
greediness  would  not  permit  him  to  release  a  part  of  the 
fruit  he  had  grabbed  so  that  he  might  extricate  his  paw  from 
the  narrow  necked  bottle  and  escape  his  pursuer.  If  the 
isolation  of  Great  Britain  continues  she  will  eventually  find 
that  she  has  thrust  her  hand  into  a  very  narrow  necked 
bottle  indeed,  one  that  may  imprison  the  member  so  tightly 
that  she  will  be  unable  to  withdraw  it  to  fight  for  existence. 

As  may  be  inferred  from  various  sources,  the  best  Eng- 
lish thought  no  longer  views  with  equanimity  the  conversion 
of  the  kingdom  into  a  vast  workshop.  There  is  no  longer  a 
disposition  to  exult  over  the  unhealthy  expansion  of  manu- 
facturing. It  is  now  seen  that  the  existence  of  nearly  ten 
millions  of  workers  in  factories,  who  find  their  means  of 
subsistence  dependent  upon  conditions  utterly  beyond  their 
control,  is  a  very  precarious  one.  Not  only  are  they  menaced 
by  the  possibility  of  having  their  food  supply  cut  ofif  by 
outside  interference,  but  the  increasing  ability  of  peoples 
hitherto  dependent  upon  the  British  for  their  supplies  of 
manufactured  articles  threatens  to  deprive  British  men  and 
women  of  the  opportunity  to  earn  a  livelihood  no  matter  how 
willing  they  may  be  to  work. 

The  results  of  national  policies  are  far  reaching  and  their 
effects  cannot  be  fully  judged  until  after  the  lapse  of  long 
periods.  At  the  height  of  Roman  grandeur  there  was  an 
economic  canker  worm  at  work  whose  appearance  was 
hardly  suspected  by  the  most  philosophic  writers  of  the  time. 
The  agriculture  of  Italy  was  steadily  sapped  by  the  competi- 
tion of  foreigners,  but  the  outward  evidences  of  prosperity 
were  such  that  few  suspected  the  extent  of  the  evil.  There 
was  grumbling  and  discontent,  but  the  rich  were  growing 
richer  and  all  seemed  serene.  Doubtless  the  condition  of 
the  proletariat  was  a  source  of  solicitude,  but  the  trend  of 
economic  thought  was  similar  to  that  met  with  in  England 


2i6         PROTECTION   AND   PROGRESS 

today.  Cheap  food  was  the  desideratum.  It  was  provided 
for  the  people  at  the  cost  of  the  native  producer.  A  vast 
pauper  class  was  maintained,  not  as  great  as  that  of  the 
England  of  today,  but  sufficiently  large  to  affect  the  imag- 
ination of  British  historians  to  such  an  extent  as  to  induce 
them  to  assign  the  destruction  of  the  Roman  Empire  to  its 
existence.  The  flocking  to  the  capital  city  of  ancient  Rome 
of  the  farming  classes,  driven  from  their  employment  by 
one  cause  and  another,  has  been  regarded  as  a  portentous 
evil  by  all  thoughtful  writers,  but  the  modern  Cobdenite 
sees  nothing  to  deplore  in  the  reduction  of  3,401,000  persons 
employed  in  British  agriculture  in  1841  to  2,527,000  in  1891. 
The  glamour  of  the  vast  accumulations  of  British  wealth  is 
over  him,  and  he  fancies  that  it  cannot  crumble  away.  The 
ancient  Romans  also  regarded  their  condition  with  com- 
placency.   Pliny,  in  describing  his  native  country,  said : 

"Italy  is  the  land  which  is  at  once  the  foster  child  and 
the  parent  of  all  lands ;  chosen  by  the  providence  of  the 
gods  to  render  even  heaven  itself  more  glorious,  to  unite  the 
scattered  empires  of  the  earth,  to  bestow  a  polish  upon  men's 
manners,  to  unite  the  descendent  and  uncouth  dialects  of  so 
many  different  nations  by  the  powerful  ties  of  a  common  lan- 
guage, to  confer  the  enjoyments  of  discourse  and  civiliza- 
tion upon  mankind,  to  become,  in  short,  the  mother  country 
of  all  nations  of  the  earth."* 

Just  such  a  destiny  had  the  Cobdenites  marked  out  for 
Great  Britain  when  they  planned  to  make  it  the  workshop 
of  the  world.  The  ambition  of  the  ancient  and  modern  em- 
pires run  in  parallel  grooves,  and  the  causes  that  wrecked 
the  one  will  contribute  to  the  downfall  of  the  other,  and  not 
the  least  of  these  is  the  subordination  of  agriculture  to  other 
pursuits.  When  Pliny  delivered  himself  of  the  vainglorious 
utterance  above  quoted  Rome  was  rotten  at  the  core.    Her 


*Pliny,  Natural  History,  Book  III,  Chap.  VI. 


AGRICULTURE  217 

heart  was  being  slowly  eaten  out  by  the  destruction  of  the 
farming  class,  and  when  cheap  imports  and  other  causes  had 
utterly  destroyed  the  yeomanry  of  Italy  the  fair  rind  col- 
lapsed and  exposed  the  hollow  and  rotten  interior. 


CHAPTER  XL 

INDUSTRIAL   DEVELOPMENT. 

UNSUCCESSFUL  EFFORTS  OF  FREE  TRADERS  TO  PROMOTE  EXOTIC 
INDUSTRIES. 

Pursuits  which  Britons  have  been  forced  to  abandon — The  manufac- 
ture of  cotton  textiles  constantly  menaced — Effects  of  the  Ameri- 
can civil  war  on  the  English  cotton  industry — The  British  navy 
maintained  so  that  exotic  industi-ies  may  be  pursued  in  Great 
Britain — Free  trade  an  obstacle  to  a  people  accurately  gauging 
their  true  powers — England's  list  of  decaying  industries — Beet 
sugar  industry — Establishment  of  iron  and  steel  plants  in  the 
United  States — The  erroneous  assumption  that  the  dearness  due 
■  to  protection  is  permanent — The  growth  of  British  imports  and 
what  they  signify — Foreign  manufactured  articles  supplanting 
those  of  British  manufacturers  in  the  home  market  of  Great 
Britain — The  decline  of  British  exports — The  interests  of  the 
strictly  consuming  classes  and  the  producer  not  identical — 
Debtor  countries  will  pay  English  creditors  with  products  of 
their  factories — The  tendency  of  production  to  outstrip  the 
ability  to  effectively  consume. 

The  preceding  chapter  was  largely  devoted  to  the  discus- 
sion of  the  Cobdenite  fallacy  that  when  artificial  aid  is 
extended  to  assist  the  creation  of  an  industry  in  a  new  coun- 
try it  necessarily  follows  that  capital  has  been  diverted  from 
some  employment  in  which  it  might  have  been  more  profit- 
ably used.  It  was  shown  that  the  assumption  was  erroneous, 
evidence  being  produced  to  establish  the  fact  that  there  is 
a  plethora  of  capital  in  the  world  and  that  the  surplus  of 
one  country  finds  its  way  to  other  countries  where  there 
is  a  deficiency,  thus  overcoming  the  drawback  which  free 
traders  assume  must  ensue  whenever  it  is  found  necessary 

2I» 


DEVELOPMENT  219 

to  protect  an  industry  from  the  encroachment  of  established 
rivals.  In  addition,  overwhelming  testimony  was  presented 
to  prove  that  in  one  protective  country  at  least  the  attempt 
to  artificially  establish  manufactories  had  been  successfully 
accomplished  without  impeding  the  growth  of  the  industry 
which  the  followers  of  the  Manchester  school  affirmed  was 
the  one  which  could  most  profitably  be  pursued  because  it 
was  the  one  which  did  not  require  government  assistance 
to  prevent  foreign  encroachments. 

In  the  course  of  this  demonstration  a  passage  was  quoted 
from  a  review  article  written  by  the  Rt.  Hon.  W.  E.  Glad- 
stone, in  which  he  broadly  implied  that  all  protected  indus- 
tries were  exotic  in  character.  In  this  article  he  used  the 
well-worn  illustration  of  the  attempt  to  grow  pineapples 
under  glass  in  competition  with  the  fruit  naturally  grown 
in  the  tropics  and  asserted,  almost  v/ithout  reservation,  that 
the  nominal  dearness  which  marks  the  early  stage  of  an  effort 
to  promote  the  production  of  an  article  is  something  to  which 
the  consumers  of  protectionist  countries  must  be  perma- 
nently subject.  That  Mr.  Gladstone  and  other  free  traders 
held  such  a  view  is  due  to  the  error  already  dwelt  upon  of 
assuming  that  some  countries  are  naturally  fitted  to  be  pro- 
ducers of  raw  materials  and  food  stuffs,  while  others  are 
endowed  by  Providence  with  the  ability  to  fashion  the  rude 
products  of  the  earth  into  finished  articles.  Their  tenacious 
adherence  to  this  view  blinds  them  to  the  fact  that  the  ability 
of  their  countrymen  was  acquired,  and  prevents  their  seeing 
that  other  peoples,  with  a  proper  degree  of  encouragement 
and  sufficient  protection,  may  also  attain  the  skill  requisite  to 
take  a  position  in  manufacturing. 

But  the  entertainment  of  the  erroneous  idea  that  Provi- 
dence had  specially  fitted  the  British  to  be  the  manufacturers 
for  the  rest  of  the  world  is  responsible  for  a  still  more  serious 
blunder  than  that  of  underestimating  the  capabilities  of 
other  peoples ;  it  has  had  the  evil  effect  also  of  inducing  the 
British  to  overestimate  their  own  capabilities  and  has  led 


220         PROTECTION   AND   PROGRESS 

them  to  engage  in  pursuits  for  which  they  were  unfitted,  as 
the  sequel  has  already  shown.  The  list  of  once  flourishing 
but  now  decadent  British  industries  is  by  no  means  a  short 
one,  as  will  be  seen  later  on,  but  it  is  not  nearly  so  porten- 
tous as  the  fact  that  the  branch  of  manufacturing  in  which 
Britons  are  still  pre-eminent  is  subject  to  vicissitudes  which 
may  at  any  time  impose  want  and  misery  upon  the  hundreds 
of  thousands  who  derive  a  living  from  its  pursuit.  The 
conditions  surrounding  this  particular  industry  in  Great 
Britain  are  such  it  is  amazing  that  economists,  real  or  al- 
leged, should  assume  that  its  domestication  in  England  was 
natural. 

It  will  be  a  source  of  wonder  for  future  generations  that 
a  country  situated  as  Great  Britain  is  should  have  aspired 
to  produce  textile  fabrics  for  the  people  of  the  whole  world, 
but  it  will  not  seem  half  so  curious  as  the  failure  of  the  Brit- 
ish economists  to  recognize  that  while  condemning  the  at- 
tempts of  other  peoples  to  develop  their  own  resources  as 
blundering  efforts  to  defy  the  laws  of  nature,  the  system  they 
extolled  was  responsible  for  the  promotion  in  the  United 
Kingdom  of  exotic  industries  which  could  not  be  perma- 
nently maintained  in  competition  with  other  peoples. 

That  the  cotton  manufacturing  industry  as  pursued  in 
Great  Britain  is  a  true  exotic  will  be  recognized  by  any  one 
taking  into  consideration  the  fact  that  it  is  absolutely  de- 
pendent upon  remote  countries  for  its  supplies  of  raw  ma- 
terials. The  superiority  enjoyed  by  the  British  for  a  time 
in  this  industry  was  due  to  the  temporary  advantage  of 
liaving  a  greater  fund  of  experience  and  larger  amounts  of 
capital  than  was  possessed  by  rivals  with  abundant  supplies 
of  raw  material  at  their  doors.  But  these  strictly  artificial 
advantages  did  not  serve  to  avert  a  calamity  which  brought 
starvation  and  ruin  in  its  train.  During  the  Civil  War  in 
the  United  States,  which  occurred  while  the  superiority  of 
the  English  as  cotton  manufacturers  was  at  its  zenith,  the 
operatives  employed  in  the  mills  of  Manchester  were  re- 


DEVELOPMENT  221 

duced  to  pauperism  and  became  a  public  charge  because  raw 
materials  could  not  be  obtained  for  them  to  fashion  into 
finished  articles. 

An  English  writer,  discussing  the  effects  of  the  cotton 
famine  caused  by  the  blockade  of  the  ports  of  the  Southern 
Confederacy  by  the  United  States,  tells  us  that :  "The  dis- 
advantage of  a  concentrated  source  of  supply  over  sea  in 
any  important  raw  material  or  essential  food  was  never  more 
terribly  brought  home  to  the  British  than  by  the  Manchester 
cotton  famine  during  the  American  Civil  War.  By  1863  the 
weekly  loss  of  wages  was  calculated  at  i  168,000,  pauperism 
in  the  cotton  districts  increased  by  140  per  cent.,  and  some 
500,000  persons  were  in  receipt  of  regular  relief.  No  less 
a  sum  than  £4,000,000  was  spent  in  simply  provid- 
ing for  working  classes,  and  nearly  £3,000,000  was  sub- 
scribed by  private  charity.  At  the  time  the  United  Kingdom 
was  favored  by  exceptionally  good  harvests  and  the  linen 
and  woolen  trades  were  in  a  flourishing  condition.  It  was, 
therefore,  simply  the  cutting  off  of  a  single  commodity  which 
produced  all  the  distress."* 

It  is  not  necessary  to  follow  the  argument  of  the  writer  or 
to  dwell  on  the  difficulties  which  he  asserts  will  confront 
the  British  people  because  of  their  dependence  upon  other 
countries  for  supplies  of  food  stuff  and  raw  materials  in 
case  they  become  involved  with  another  power.  His  bare 
recital  shows  conclusively  that  the  undue  expansion  of  the 
cotton  textile  industry  in  England  is  an  extreme  violation 
of  an  economic  law  which  the  Cobdenites  say  cannot  be  ig- 
nored with  impunity.  When  the  circumstances  are  consid- 
ered it  is  surprising  that  statesmen  should  devote  their 
energies  to  the  creation  of  a  condition  which  must  be  a  con- 
stant menace  to  the  national  welfare.  In  overcrowding  the 
United  Kingdom  with  a  population  so  largely  dependent 


♦Bellairs,  Manchester  Cotton  Famine  and  England's  Food  Supply, 
ia  Hongkong,  China,  Mail. 


222        PROTECTION  AND  PROGRESS 

upon  the  outside  world  for  subsistence  the  British  are  con- 
stantly inviting  disasters  of  the  kind  described,  perhaps  still 
worse  ones. 

Economists  of  the  Manchester  school  may  shut  their  eyes 
to  facts  like  these,  but  by  doing  so  and  by  applauding  meth- 
ods which  lead  to  such  results  they  stultify  themselves  and 
virtually  place  the  stamp  of  approval  upon  attempts  to  create 
exotic  industries.  When  they  assent  to  heavy  expenditures 
for  an  immense  navy,  the  principal  object  of  whose  main- 
tenance is  the  keeping  open  of  British  ports  so  that  the  arti- 
ficial industries  of  the  United  Kingdom  may  not  be  choked  by 
foreign  interference,  they  are  as  truly  protectionists  as  those 
who  advocate  high  duties  for  the  purpose  of  encouraging 
home  industries.  But  they  are  not  so  rational  as  the  latter, 
who  aim,  by  making  their  country  self-dependent,  to  guard 
against  disasters  of  the  kind  to  which  a  nation  attempting  to 
maintain  industries  without  adequate  supplies  of  raw  ma- 
terials must  always  be  subject. 

The  cotton  industry  of  Great  Britain  is 'not  the  only  one 
subject  to  the  drawbacks  here  outlined.  It  may  be  sweep- 
ingly  asserted  that  any  country  which  forces  the  growth 
of  a  population  greater  than  its  agricultural  resources  can 
maintain  is  adopting  a  perilous  course  which  can  only  be 
safely  pursued  by  resorting  to  aggression,  and,  under  such 
circumstances,  only  for  a  limited  period.  English  writers 
proclaim  that  Britain  is  carrying  the  torch  of  civilization 
throughout  the  world  and  endeavor  to  convey  the  impression 
that  the  object  of  the  enormous  territorial  expansion  of  the 
British  Empire  is  to  bring  law  and  enlightenment  to  barba- 
rian peoples,  but  no  one  is  deluded  by  such  professions.  The 
most  sordid  motives  lie  at  the  bottom  of  every  external 
movement  of  Great  Britain  and  every  benefit  conferred  by 
that  country  upon  another  is  paid  for  in  pounds,  shillings 
and  pence  or  their  equivalents. 

"It  matters  not,"  remarked  a  recent  English  review  writer, 
to  discuss  the  academic  question  of  whether  the  negro  is 


DEVELOPMENT  223 

happier  dancing  stark  naked  under  the  moon  or  eating  pump- 
kin under  the  sun,  as  Carlyle  described  him.  We  want  him 
clpthed  because  our  looms  will  clothe  him ;  we  want  him 
housed  and  ornamented  because  our  Sheffield  firms  will  sup- 
ply the  wherewithal.  We  want  his  fields  to  double  their 
produce,  and  that  produce  to  be  of  marketable  quality,  be- 
cause it  is  needed  by  our  manufacturers  here  in  England. 
We  deal  today  witht  the  commercial  side  of  the  question ; 
the  philanthropic  dividends  we  will  put  aside  for  the  moment. 
They  are  concomitants."*  In  another  place  the  same 
writer  flatly  asserts  that  British  philanthropy  is  generally 
mixed  with  rum  and  gin  and  gives  an  account  of  an  African 
bishop  who  complained  that  there  was  nothing  in  the  fac- 
tories of  his  neighborhood  to  exchange  for  the  products  of 
the  natives  but  the  spirituous  liquors  mentioned. 

Surely  a  commerce  which  can  only  be  maintained  by 
resorting  to  such  extremities  can  hardly  be  termed  natural, 
nor  does  it  lie  in  the  mouths  of  those  who  defend  the 
abnormalities  to  which  reference  has  been  made  to  criticise 
the  methods  of  protectionists.  A  just  comparison  of  the 
two  systems  will  clearly  establish  that  the  results  of  Cobden- 
ism  have  all  been  in  the  direction  of  a  distortion  of  nature, 
while  the  protective  policy,  whenever  it  has  been  intelligently 
pursued,  has  always  tended  to  a  development  along  natural 
lines.  And  this  explains  why  protection  has  made  such  head- 
way. Had  it  been,  as  Mr.  Gladstone  and  other  free  traders 
have  assumed,  the  policy  of  protectionists  to  stimulate  exotic 
industries  their  efforts  must  inevitably  have  failed. 

It  has  been  asserted  by  eminent  free  trade  writers  that 
the  great  virtue  of  the  system  advocated  by  them  consists  in 
its  tendency  to  safeguard  a  people  against  the  blunder  of 
engaging  in  unprofitable  industry.  Professor  Rogers  says: 
"Our  contention  is  that  our  free  trade  policy  enables  us  to 


♦Lugard,    New   British    Markets,   Nineteenth   Century,    September, 
1895- 


224         PROTECTION   AND   PROGRESS 

arrive  at  the  most  accurate  estimate  of  our  powers.  We  do 
not  plant  olive  or  orange  groves  or  vineyards  in  our  climate, 
for  we  know  that  they  will  not  thrive  or  will  not  live.  No 
doubt  they  might  be  grown  in  greenhouses.  But  we  are 
not  so  foolish  as  to  put  such  a  duty  on  the  foreign  produce 
of  olives,  oranges  and  grapes  as  to  encourage  native  industry 
in  growing  them  under  these  adverse  and  costly  conditions, 
as  a  consistent  protectionist  and  fair  trader  would  have  to 
do.  For  it  is  only  a  matter  of  degree  between  the  most 
plausible  protection  and  the  most  grotesque  illustration  of  the 
practice."* 

It  is  not  necessary  to  again  point  out  that  the  Cobdenite 
contention  that  protection  aims  at  the  establishment  of  exotic 
industries  is  in  the  nature  of  a  setting  up  of  "a.  straw  man," 
for  nothing  has  been  more  conclusively  demonstrated  by 
practice  than  the  fact  that  the  very  oppositie  result  is  the  one 
which  advocates  of  a  protective  tariff  aim  at  achieving.  No 
sane  protectionist  in  the  United  States  favors  the  imposition 
of  a  protective  tariff  unless  the  encouragement  thus  extended 
promises  to  promote  a  profitable  industry.  But  it  may  not 
be  amiss  to  show  that  Professor  Rogers  was  in  error  when  he 
asserted  tJiat  "the  free  trade  policy  of  England  had  enabled 
the  British  to  arrive  at  the  most  accurate  estimate  of  their 
own  powers." 

To  substantiate  an  assertion  of  this  kind  it  would  be 
necessary  to  show  that  the  course  of  British  industry  has 
been  so  well  determined  that  its  pursuit  is  unattended  by  any 
other  drawbacks  than  those  which  ordinarily  wait  upon  the 
conduct  of  established  occupations.  To  claim  that  a  people 
have  accurately  measured  their  own  powers  while  constantly 
losing  advantages  once  gained  in  industrial  fields,  and  who 
are  under  an  overpowering  dread  of  the  possible  outcome  of 
competition  with  rival  nations,  is  absurd.    If  the  powers  of 

♦Rogers,  Industrial  and  Commercial  History  of  England,  p.  408. 


DEVELOPMENT  225 

Great  Britain  had  been  accurately  determined  by  free  trade 
that  country  would  not  have  a  long  record  of  decayed  or 
decaying  industries. 

According  to  Mulhall  the  silk  industry  was  in  a  flourish- 
ing condition  in  1857,  ^^e  consumption  of  raw  material  in 
that  year  reaching  10,750,000  pounds  and  the  value  of  the 
manufactured  fabrics  being  £21,500,060.  Forty-four  years 
earlier,  in  1823,  the  consumption  of  raw  silk  was  only 
2,470,000  pounds  and  the  value  of  the  finished  product 
i6,200,ooo.  The  interval  between  1823  and  1857  was  marked 
by  a  steady  advance  in  the  manufacture  of  silk  textiles,  and 
no  British  industry  appeared  to  have  a  more  promising  out- 
look. The  economic  literature  of  the  early  '50's  is  filled 
with  references  to  the  prosperity  of  the  manufacturers  of 
British  silk,  but  in  1895  the  consumption  of  raw  silk  had 
fallen  to  3,900,000  pounds  and  the  value  of  the  textiles 
produced  was  £200,000  less  than  in  1823. 

In  1850  the  linen  industry  of  Great  Britain  consumed 
21,000  tons  of  native  and  89,000  tons  of  imported  flax.  In 
1895  the  quantity  of  native  flax  used  in  the  linen  factories  of 
the  United  Kingdom  was  12,000  tons  and  100,000  tons  were 
imported.  The  increased  consumption  of  the  fiber  in  forty- 
five  years  was  only  2,000  tons.  Commenting  on  these  facts, 
Mulhall  says :  "Of  late  years  the  linen  trade  has  been  declin- 
ing, especially  as  regards  home  consumption,  which  averaged 
eight  yards  per  inhabitant  in  1840  and  is  now  less  than  five 
yards."  The  decline  here  noted  is  not  due  to  the  use  of  linen 
falling  into  disfavor,  for  the  production  of  other  countries, 
notably  Germany,  has  greatly  increased. 

At  the  beginning  of  the  free  trade  era  in  Great  Britain 
there  was  apparently  no  more  firmly  established  industry 
than  that  of  refining  raw  sugar.  Enormous  plants  erected 
for  this  purpose  were  conspicuous  features  of  Greenwich 
and  other  ports.  The  industry  was  exceedingly  profitable 
and  the  consensus  of  free  trade  opinion  up  to  a  certain  period 
was  that  it  was  firmly  intrenched.     The  person  who  would 

15 


226         PROTECTION  AND  PROGRESS 

have  ventured  to  predict  the  decadence  of  sugar  refining 
in  the  United  Kingdom  in  i860  would  have  been  deemed 
mad.  Yet  a  few  years  later  a  royal  commission  was  ap- 
pointed to  inquire  into  the  causes  of  the  extinction  of  the  cane 
sugar  industries  in  the  British  colonies  and  incidentally  to 
ascertain  whether  a  remedy  could  be  devised  which  would 
prevent  the  total  extirpation  of  the  refineries  of  the  United 
Kingdom.  Concurrently,  a  strong  sentiment  was  created 
against  the  policy  of  foreign  countries  promoting  exports  of 
beet  sugar  by  the  payment  of  bounties,  and  although  the 
effect  was  to  greatly  cheapen  the  sugar  used  by  the  British 
consumer  diplomatic  efforts  were  made  by  V^ictoria's  gov- 
ernment to  induce  the  beet  sugar  countries  to  abandon  the 
payment  of  bounties.  The  most  recent  development  in  this 
interesting  contradiction  of  the  principles  of  Cobdenism 
was  a  proposal  made  by  Joseph  Chamberlain  to  indemnify 
the  sugar  producers  in  the  British  colonies  against  loss,  the 
object  being  to  overcome  the  obvious  advantages  enjoyed 
by  the  producers  of  beet  sugar. 

These  illustrations  clearly  show  that  Professor  Rogers 
was  seriously  in  error  when  he  assumed  that  the  system  he 
advocates  has  assisted  the  British  to  accurately  determine 
their  powers.  On  the  contrary,  by  creating  the  fallacious 
opinion  that  the  markets  of  the  world  are  illimitable,  and 
that  Providence  intended  that  the  British  should  be  the 
principal  if  not  the  only  purveyors  for  them,  Britons  have 
been  tempted  into  all  sorts  of  industrial  enterprises,  in  most 
of  which  they  cannot  hope  to  maintain  a  permanent  footing. 
They  have  been  encouraged  to  do  this  by  the  teachings  of 
extremists  who  have,  like  Rogers,  always  assumed  that 
temporary  dearness  in  a  new  country  trying  to  promote  man- 
ufactures meant  permanent  dearness.  They  have  accepted 
without  question  the  statement  of  Mill  that  a  duty  on  an 
article  which  may  be  more  cheaply  imported  from  abroad 
than  it  can  be  manufactured  for  at  home  must  result  in 


DEVELOPMENT  :i2.^ 

useless  labor,  and  that  the  extra  capital  expended  in  such 
production  is  wasted.* 

If  nations  survived  only  for  a  day  economy  of  the  kind 
advocated  by  Cobden  might  be  deemed  rational,  but  as  the 
possibility  of  their  enduring  for  centuries  is  well  established 
statesmen  may  reasonably  take  measures  for  the  future  of 
the  countries  whose  destinies  they  control  even  at  the  risk 
of  temporary  inconvenience.  If  the  creation  of  an  iron  and 
steel  industry  is  regarded  as  practicable  there  is  as  much 
warrant  for  calling  it  into  existence  by  artificial  means  as 
there  is  for  a  man  sinking  a  well  in  an  accessible  place  rather 
than  subjecting  his  household  to  the  necessity  of  going  a 
long  distance  to  a  brook  where  the  water  flows  freely  and 
may  be  had  for  the  taking.  It  may  be  the  natural  method 
to  procure  water  in  the  simplest  manner  and  primitive  peo- 
ples still  do  so,  but  those  recognizing  the  importance  of 
economizing  energy  almost  instinctively  resort  to  artificial 
methods  of  securing  supplies  of  water.  That  they  profit 
by  so  doing  is  self-evident,  or  the  practice  would  not  be 
continued  and  refined  as  the  years  roll  on. 

The  artful  concealment  of  the  true  purposes  of  pro- 
tectionists is  responsible  for  many  blunders  into  which  prac- 
tical Englishmen  have  fallen.  The  persistency  with  which 
Cobdenites  have  asserted  that  high  tariffs  cause  dearness 
has  obscured  the  aim  of  protectionists,  whose  object  is  to 
promote  ultimate  and  permanent  cheapness.  It  has  also 
tended  to  create  the  impression  that  the  existence  of  a  well 
established  industry  determines  that  it  came  into  being 
naturally.  False  teachings  of  this  kind  have  prevented 
otherwise  acute  Britons  seeing  that  most  of  their  man- 
ufactories are  purely  artificial  creations,  and  that  the  in- 
dustrial success  of  the  British  is  more  largely  due  to  their 
promptitude  in  availing  themselves  of  the  benefits  of  modern 
discoveries  than  to  natural  causes  or  superior  resources. 


*Mill,  Principles  of  Political  Economy,  Vol.  II,  p.  449. 


228         PROTECTION  AND  PROGRESS 

A  concrete  illustration  of  the  error  underlying  the 
assumption  that  present  clearness  means  permanent  clearness 
is  furnished  by  the  growth  of  the  iron  and  steel  industry 
in  the  United  States.  According  to  Mr,  Mill,  whose  views 
appear  to  be  shared  by  all  free  traders,  the  Americans  made 
an  economic  blunder  in  imposing  a  high  duty  upon  imports 
of  these  commodities.  In  the  passage  above  quoted  and  in 
many  others  the  idea  is  distinctly  conveyed  that  "all  customs 
duties  which  operate  as  an  encouragement  to  the  home  pro- 
duction of  the  taxed  article  are  an  eminently  wasteful  mode  of 
raising  a  revenue,"  the  reason  assigned  for  this  wastefulness 
being  that  "an  extra  cjuantity  of  labor  and  capital  is  expended 
without  any  extra  result."  This,  Mr.  Mill  says,  is  equivalent 
to  paying  people  for  laboriously  doing  nothing. 

Such  an  opinion  could  only  be  based  on  a  supposition  that 
the  hindrances  to  cheapness  which  manifest  themselves  in  an 
infant  industry  are  incapable  of  being  removed,  and  that 
the  advantages  enjoyed  by  others  in  a  well  established  in- 
dustry cannot  be  acquired  by  a  resort  to  artificial  methods. 
Reference  to  the  views  expressed  by  Gladstone,  quoted  in 
another  part  of  this  chapter,  and  to  those  of  Rogers,  clearly 
indicate  that  they  believed  that  industrial  conditions  were 
immutably  fixed  and  that  all  efllorts  of  new  countries  to  rival 
old  ones  by  a  resort  to  tariffs  must  inevitably  prove  fruitless, 
because  they  result  in  making  the  conditions  of  life  more 
difficult  by  depriving  people  of  the  opportunity  to  buy 
cheaply.  Rogers  was  so  firmly  convinced  that  such  a  result 
must  ensue  from  protection  that  in  one  of  his  lectures,  after 
telling  the  listening  students  that  the  tariffs  of  foreign  na- 
tions had  a  tendency  to  hinder  British  manufacture  and 
trade,  he  assured  them  that  such  hindrance  could  never  be 
serious,  because  in  protective  countries  "the  law  allows  the 
subject  of  it  (protection)  to  buy  one  pair  of  boots  where  he 
might  buy  two  pairs,  and  stints  him  in  many  ways."* 

*Rogers,  Industrial  and  Commercial  History  of  England,  p.  410. 


DEVELOPMENT  229 

The  illustration  employed  was  a  very  unhappy  one,  and 
shows  the  unpractical  character  of  this  celebrated  author. 
About  the  time  he  made  the  remarks  quoted  there  was  a 
violent  upheaval  in  the  boot  and  shoe  trade  in  England,  the 
British  workers  complaining  that  the  imported  American 
product  was  driving  their  wares  out  of  the  home  market. 
The  papers  of  the  English  capital  contained  numerous  allu- 
sions to  the  trouble,  and  no  rational  person  could  have  failed, 
had  he  followed  the  discussion  intelligently,  to  note  that  the 
protected  boot  and  shoemakers  of  America  were  for  some 
reason  or  other  producing  more  cheaply  than  their  British 
rivals.  What  these  reasons  were  will  be  made  clear  in  an- 
other place ;  here  it  is  only  intended  to  show  the  persistence  of 
the  free  trade  belief  that  protection  means  absolute  and  per- 
manent dearness,  and  that  it  seems  to  survive  in  spite  of  the 
practical  demonstration  that  boots  and  shoes  and  other  arti- 
cles whose  cost  of  production  was  once  much  higher  than  in 
England  can  now  be  made  more  cheaply  in  the  United  States 
than  in  Great  Britain,  for,  as  we  have  shown,  Rogers,  in  the 
face  of  the  fact  that  Americans  were  the  best  shod  people  on 
the  globe  at  the  time  he  spoke,  did  not  hesitate  to  intimate 
that  the  people  of  this  country  lacked  shoes. 

In  the  same  way  it  is  still  urged  that  the  effect  of  protec- 
tion is  to  make  the  iron  and  steel  consumed  in  protective 
countries  dearer  than  it  would  have  been  under  free  trade 
conditions,  although  the  market  reports  conclusively  establish 
the  fact  that  those  commodities  are  cheaper  in  the  United 
States  at  present  than  in  Great  Britain.  An  English  financial 
publication,  in  discussing  the  future  of  British  trade,  summed 
up  the  situation  so  far  as  this  branch  of  industry  is  con- 
cerned when  it  said  :  "There  is  quite  a  large  probability  that 
we  may  have  to  fall  back  upon  America  at  no  distant  future 
time  to  make  good  our  deficient  supply  of  pig  iron — on 
America,  once  our  largest  buyer  of  both  pig  and  finished  ma- 
terials."* 

♦London  Statist,  March  g,  1898. 


230         PROTECTION   AND   PROGRESS 

Obviously,  if  Great  Britain  is  obliged  to  resort  to  this 
country  for  supplies  of  pig  iron  it  must  be  because  we  are 
able  to  produce  it  more  cheaply  than  it  is  produced  elsewhere. 
Thus,  the  whole  Cobdenite  contention  that  protection  m.eans 
permanent  dearness  is  effectually  disposed  of.  No  wonder 
the  editor  of  the  journal  quoted  from  delivered  himself  of 
the  observation  which  concludes  his  sentence.  Educated  to 
believe  that  the  results  of  protection  were  to  hamper  industry 
and  to  keep  the  countries  resorting  to  it  in  a  condition  which 
would  not  permit  them  to  compete  with  nations  practicing 
free  trade,  he  must  naturally  have  felt  surprised  when  he 
contemplated  the  evidence  furnished  by  tables  of  prices  and 
imports,  which  proved  conclusively  that  the  United  States 
was  able  to  undersell  Great  Britain  in  her  own  iron  market. 

The  facts  here  related,  and  numerous  others  which  might 
be  cited  to  show  that  the  British  home  market  is  being  stead- 
ily encroached  upon  by  manufacturers  operating  in  protec- 
tive countries,  such  as  the  United  States  and  Germany,  raise 
the  question  whether  an  industrial  invasion  of  this  kind 
amounts  to  a  demonstration  that  the  British  in  all  those  lines 
in  which  they  now  find  themselves  unable  to  compete  with 
foreigners  had  made  the  blunder  of  attempting  to  domesti- 
cate exotic  industries. 

The  confident  assertion  of  Rogers  that  the  practice  of 
free  trade  enables  a  people  to  determine  with  exactness  the 
extent  of  their  industrial  powers  indicates  the  presence  of  a 
belief  in  his  mind  at  the  time  he  wrote  that  the  then  flour- 
ishing industries  of  Great  Britain  were  so  firmly  established 
that  they  could  not  be  successfully  competed  with  by  for- 
eigners, least  of  all  by  such  as  resorted  to  protective  tariffs, 
which  he  assumed  must  permanently  increase  the  cost  of 
production.  His  illustrations  were  designed  to  show  this, 
and  his  argument,  if  followed  to  its  logical  conclusion,  im- 
plied that  Great  Britain  had  only  won  success  when  she  pur- 
sued those  industries  which  could  be  maintained  in  perma- 
nent profitable  rivalry  with  those  of  other  nations.  All  indus- 


DEVELOPMENT  231 

tries  incapable  of  meeting  competition  he  placed  in  the  cate- 
gory of  exotics,  and  they  were,  therefore,  to  be  shunned. 

If  Professor  Rogers  had  foreseen  the  consequences  which 
must  ensue  to  the  British  people  from  adhering  to  the  idea 
that  industries  requiring  protection  do  not  deserve  to  exist 
he  would  certainly  have  modified  his  views.  No  matter  how 
much  prosperity  may  be  figured  out  for  a  nation  by  the  a 
priori  method,  it  is,  after  all,  the  practical  result  which  must 
determine  whether  a  system  has  been  successful.  The  Cob- 
denites  may  succeed  in  deceiving  themselves  into  believing 
that  Great  Britain  is  in  a  flourishing  condition,  because  she 
is  able  and  does  constantly  buy  an  enormously  greater  quan- 
tity of  products  from  foreigners  than  she  gives  in  return,  but 
sensible  men  recognize  that  the  growth  of  imports  and  the 
relative  decline  of  exports  is  a  menace  to  the  future  prosper- 
ity of  the  United  Kingdom.  When  friendly  critics  thus  diag- 
nose the  industrial  condition  of  Great  Britain  the  people  of 
that  country  may  well  take  warning:  "For  a  time,"  says  a 
writer  in  an  English  review,  "England,  no  doubt,  prospered 
pecuniarily  and  great  fortunes  were  made ;  but  now,  with  im- 
ports almost  double  the  exports,  v/ith  the  imports  steadily 
increasing  and  the  exports  steadily  diminishing,  the  nation  is 
not  even  gaining  in  her  manufactures,  but  is  losing  to  other 
nations  every  day."* 

The  same  writer  says :  "The  present  temporary  pros- 
perity in  England,  which  is  not  based  upon  a  solid  or  perma- 
nent foundation,  unfortunately  tends  still  more  to  create  the 
belief  in  the  public  mind  that  the  state  of  affairs  in  England  is 
satisfactory."  Reference  is  here  made  to  the  delusion  that 
the  constant  draft  made  upon  foreigners  for  their  products  is 
a  sign  of  present  national  prosperity,  whereas  it  merely 
represents  the  returns  upon  the  profitable  results  of  a  previ- 
ous era  of  prosperity.     Sir  Howard  Vincent,  in  a  letter  to 

*Denison,  The  Present  Situation  of  England,  Nineteenth  Century, 
December,   1897. 


232         PROTECTION   AND   PROGRESS 

the  London  Times  published  toward  the  close  of  the  year 
1896,  indicated  the  unsatisfactory  character  of  the  Cobdenite 
claim  that  excessive  imports  were  an  evidence  of  prosperity 
by  pointing  out  that  £80,504,991  worth  of  foreign  manufac- 
tures were  imported  into  the  United  Kingdom  in  a  single 
year  and  that  these  importations  represented  at  least  £40,- 
000,000  paid  to  foreign  workers  which  might  have  been 
earned  by  Britons. 

That  the  money  paid  out  for  this  vast  quantity  of  man- 
ufactured articles  imported  into  Great  Britain  represents  "in 
part  the  interest  upon  millions  sent  to  foreign  countries  to 
enable  them  to  compete  with  the  British"  is  undoubtedly  true, 
but  it  is  questionable  whether  the  indirect  suggestion  that 
Sir  Howard  makes,  that  a  period  should  be  put  to  the  folly 
of  depriving  British  workingmen  of  an  opportunity  to  earn  a 
living  by  making  the  importation  of  manufactured  articles 
into  the  United  Kingdom  more  difficult,  can  be  acted  upon. 
A  consideration  of  all  the  circumstances  shows  that  Great 
Britain  has  entered  an  industrial  cul  de  sac,  from  which  re- 
treat is  impossible  except  by  the  method  indicated  by  Mallock 
■ — 'the  drastic  one  of  depopulation.*  This  frank  controver- 
sialist does  not  hesitate  to  say  that  if  the  conditions  arise 
which  prevent  the  maintenance  of  a  greater  population  than 
15,000,000  in  the  British  Isles  the  surplus  must  betake  them- 
selves to  other  countries  or  perish  from  starvation.  It  is  a 
forbidding  future  to  contemplate,  but  the  evidence  is  accu- 
mulating that  it  is  a  condition  the  British  must  face,  and  the 
strongest  link  in  the  chain  is  the  growth  of  imports  of  man- 
ufactured articles. 

Consider  what  this  expansion  means.  Primarily,  it 
amounts  to  a  refutation  of  the  Cobdenite  asumption  that 
Providence  designed  the  United  Kingdom  to  be  the  work- 
shop of  the  world,  for  the  growing  list  of  articles  manufac- 
tured in  foreign  countries  which  now  find  a  ready  sale  in 


*Mallock,  Altruism  in  Economics,  Forum,  August,  1896. 


DEVELOPMENT  233 

Great  Britain  embraces  many  things  which  the  British  once 
imagined  they  were  specially  fitted  to  produce.  The  fact 
that  adherents  of  the  Manchester  school  cheerfully  proclaim 
that  it  is  wise  to  buy  manufactured  articles  from  foreigners 
if  they  can  produce  them  more  cheaply  than  the  British  may 
serve  for  a  while  to  disguise  the  actual  condition,  but  ulti- 
mately the  sound  sense  of  the  nation  will  pierce  the  deception 
which  surrounds  the  doctrine  that  the  consumer  is  the  chief 
person  to  consider  and  discover  the  fallacy  underlying  the 
free  trade  assumption  that  the  interests  of  producing  and 
non-producing  consumers  of  a  country  are  identical.  As  the 
tendency  to  increase  imports  grows  the  British  people  will 
more  readily  be  able  to  perceive  that  the  excess  of  imports 
over  exports  represents  the  fruits  of  past  prosperity  in  which 
the  present  and  coming  generations  of  workers  can  and  will 
have  but  little  share. 

The  growth  of  imports  of  manufactured  articles  into  the 
United  Kingdom  will  also  dissipate  the  optimistic  idea 
inculcated  by  the  Cobdenites  that  masses  of  trained  workers 
can  easily  adapt  themselves  to  changed  conditions.  There 
is  abundant  proof  furnished  by  the  experience  already  ac- 
quired that  even  when  the  conditions  are  propitious  the 
changes  forced  upon  a  people  by  improved  processes  of 
manufacture  are  effected  with  great  difificulty.  If  this  is  the 
case  when  a  nation's  progress  in  trade  and  manufacturing  is 
both  relatively  and  absolutely  great  what  may  we  not  expect 
when  the  conditions  are  reversed? 

It  has  recently  been  pointed  out  by  a  competent  British 
authority  that  the  United  Kingdom,  in  order  to  maintain, 
not  its  relative  position,  but  merely  its  footing  in  the  corri- 
merce  of  the  world,  must,  "under  the  present  conditions  of 
population  and  manufacture,"  increase  its  exports  by  at 
least  £2,600,000  annually.*  As  already  shown,  British 
exports  exhibit  no  such   increase ;   on  the  contrary,  they 


♦Kershaw,  Future  of  British  Trade,  Fortnightly,  November,  1897. 


234         PROTECTION   AND   PROGRESS 

show  an  absolute  decline,  although  of  late  years  they  have 
embraced  large  quantities  of  machinery  shipped  to  foreign 
countries  to  be  used  in  making  goods  to  be  sold  in  direct 
rivalry  with  British  manufacturers  or  to  supply  peoples 
formerly  dependent  upon  Great  Britain  for  manufactured 
articles.  And,  as  another  writer  has  significantly  pointed 
out,  a  very  large  proportion  of  British  exports  of  the  present 
day  is  made  up  of  coal  sent  to  other  countries  where  they 
are  used  to  provide  the  power  to  move  the  machinery  which 
manufactures  goods  in  competition  with  the  manufacturing 
plants  in  the  United  Kingdom.  The  fact  must  also  be 
noted  that  no  inconsiderable  part  of  the  British  value  of 
exported  articles  is  represented  by  ships,  many  of  which 
are  employed  by  the  nations  buying  them  in  competition  with 
the  carriers  of  Great  Britain. 

No  writer  taking  into  consideration  all  the  facts  here 
presented  can  avoid  drawing  the  inference  that  at  some 
future  day  Great  Britain  will  have  to  pay  a  heavy  penalty 
for  the  unnatural  expansion  which  her  economists  have 
endeavored  to  convince  themselves  has  been  entirely  unarti- 
ficial.  The  tremendous  investments  made  by  the  British  in 
foreign  countries  during  the  period  when  their  state  of 
preparedness  gave  them  an  overwhelming  advantage  over 
rivals  will  for  a  while  inure  to  the  benefit  of  the  non-pro- 
ducing income  class  of  Great  Britain  because  the  obliga- 
tions of  the  debtor  peoples  of  manufacturing  countries  will 
be  repaid  by  shipments  of  manufactured  articles  which  must 
of  necessity  be  produced  more  cheaply  in  those  lands  with 
great  resources  of  raw  materials  and  inexhaustible  supplies 
of  food  than  they  can  be  in  an  admittedly  dependent  country 
such  as  the  United  Kingdom. 

But  while  the  income  classes  are  enjoying  the  cheaply 
manufactured  articles  of  foreign  countries  the  producers  of 
the  United  Kingdom  must  sufifer.  Many  of  their  present 
avenues  of  employment  will  be  closed  and  the  population 


DEVELOPMENT  235 

will  gradually  dwindle  away.  The  "cheap  loaf"  will  avail 
nothing  because  it  will  be  relatively  dear. 

The  cheapening  due  to  the  development  of  agriculture 
has  not  been  wholly  enjoyed  by  the  workers  in  English  fac- 
tories ;  they  have  experienced  some  of  the  advantages  which 
flow  from  accessibility  to  supplies  of  cheap  food  products 
and  raw  materials,  but  the  greatest  benefits  by  far  have 
been,  and  must  in  the  future  be,  experienced  by  the  people 
of  the  countries  where  the  workers  in  factory  and  field  have 
been  brought  into  close  proximity.  As  manufacturing  de- 
velops in  the  United  States  the  demand  for  the  products  of 
American  farms  will  increase  until  ultimately  we  shall  con- 
sume the  whole  of  the  domestic  supply.  We  shall  be  able 
to  do  this  because  we  can  afiford  to  pay  more  for  food  and 
raw  material  than  peoples  living  at  a  great  distance  from  the 
source  of  supply,  and  when  we  do  so  we  shall  perforce  be 
compelled  to  pay  our  debts  with  our  cheapest  products, 
which,  under  the  changed  circumstances,  must  be  manufac- 
tured articles. 

The  optimistic  free  trader  has  assumed  that  such  a 
condition  of  affairs  could  never  arise.  He  has  convinced 
himself  that  the  marl^ets  of  the  world  are  illimitable  and 
that  some  nations  would  always  remain  in  a  contented  state 
of  dependence  upon  more  energetic  and  better  equipped 
peoples.  But  such  conclusions  are  vitiated  by  present  experi- 
ence, which  shows  that  there  is  a  constant  st'-uggle  going  on 
between  the  countries  with  established  manufacturing  indus- 
tries for  the  comparatively  insignificant  trade  of  the  peoples 
who  now  occupy  a  lower  plane  of  civilization  than  that  which 
distinguishes  the  advanced  western  industrial  nations.  It 
is  impossible  that  the  outlet  which  the  needs  of  unprogres- 
sive  peoples  supply  will  be  greatly  increased  in  the  near 
future.  The  consumptive  ability  of  this  class  increases  with 
incredible  slowness  and  their  demands  are  always  for  those 
goods  which  can  be  provided  in  great  abundance  by  a  large 


236         PROTECTION   AND   PROGRESS 

number  of  competitors,  requiring,  as  they  do,  but  a  very 
low  degree  of  skill  in  their  production. 

There  is  another  fact  which  those  who  have  contended 
that  the  world's  markets  are  illimitable  have  not  sufficiently 
considered,  namely,  the  enormous  improvements  in  the  art 
of  manufacturing  which  have  seemingly  outstripped  the 
power  to  effectively  consume.  It  is  possible  that  at  some 
future  day  better  modes  of  distribution  may  relieve  the  situa- 
tion produced  by  this  tendency,  but  the  immediate  effect 
is  overproduction.  There  is  no  doubt  whatever  in  the  minds 
of  competent  observers  that  Great  Britain  could  without 
difficulty  increase  her  plants  for  the  manufacture  of  textile 
fabrics  sufficiently  to  supply  all  the  markets  of  the  world 
with  cotton  cloth  on  the  basis  of  present  requirements. 
The  same  may  be  said  of  Germany  and  the  United  States, 
and  if  the  proper  incentive  is  furnished  the  near  future  will 
exhibit  other  countries  in  an  equally  forward  condition. 
This  being  the  case,  it  is  inevitable  that  the  struggle  for  the 
trade  of  "barbarians"  must  be  severe,  and  it  is  not  unlikely 
that  it  will  be  intensified  by  many  at  present  dependent 
Eastern  peoples  imitating  the  methods  of  Western  industrial 
nations.  No  doubt  such  efforts  would  be  accompanied  by 
a  greatly  enlarged  consumption  of  the  peoples  adopting  the 
habits  of  modern  industrial  nations,  but  their  ability  to 
provide  for  their  own  needs  is  likely  to  keep  pace  with  such 
development,  and  it  is  not  at  all  probable  that  any  change 
in  the  present  habits  of  Orientals  would  favorably  affect 
the  fortunes  of  countries  illy  supplied  with  raw  materials 
and  food  products. 

In  the  industrial  readjustment  that  is  now  taking  place 
the  tendency  to  eliminate  the  waste  of  energy  and  fuel 
involved  in  the  unnecessary  transportation  to  and  fro  of 
raw  materials,  food  supplies  and  finished  articles  will  be 
constantly  accelerated.  One  of  the  effects  of  this  elimination 
will  be  the  relative  diminution  of  foreign  exchanges.  For- 
eign trade,  which  has  increased  hitherto  in  a  greater  ratio 


DEVELOPMENT  237 

than  population,  is  likely  in  the  near  future  to  hardly  keep 
pace  with  the  growth  of  nations.  The  propensity  of  peoples 
to  produce  all  they  can  at  home  will  grow  stronger  as  the 
fallacy  of  the  idea  that  one  nation  is  better  fitted  than  another 
for  mechanical  pursuits  is  more  clearly  recognized. 

That  this  perception  will  one  day  become  general  there 
can  be  no  doubt.  There  is  a  rapidly  accumulating  body  of 
information  tending  to  show  that  there  is  a  flaw  in  the  com- 
monly accepted  economic  theory  that  some  people  are  natu- 
rally better  fitted  for  manufacturing  purposes  than  others, 
and  it  is  now  seen  that  the  greater  efficiency  displayed  by 
certain  peoples  is  entirely  due  to  acquired  abilities  and  not 
at  all  to  superior  natural  endowments.  Further  experience 
will  certainly  confirm  the  unsoundness  of  the  opinion  that  a 
nation  can  securely  depend  upon  the  superior  skill  of  its 
artisans  to  maintain  its  commercial  position,  and  it  will  also 
demonstrate,  as  people  all  over  the  globe  acquire  capabilities 
which  have  hitherto  been  regarded  as  impossible  of  attain- 
ment by  themselves  or  those  who  had  hoped  to  see 
them  remain  in  a  state  of  perpetual  dependence, 
that  the  really  exotic  industries  of  the  world  are 
those  which  have  been  created  and  are  perpetuated 
in  countries  where  manufacturing  can  only  be  carried  on 
by  incurring  the  waste  of  unnecessarily  moving  raw  materials 
and  food  supplies  from  points  where  they  might  be  effectually 
and  economically  utilized. 


CHAPTER  XII. 

LABOR  EFFICIENCY. 

INDUSTRIAL     CAPABILITY     AN     ACQUIRED,     NOT     A     NATURAL, 

FACULTY. 

The  argument  that  some  nations  are  naturally  more  capable  than 
others — Mill's  tribute  to  American  labor — Political  boundaries 
do  not  determine  the  skill  of  a  people — A  transplanted  Irishman 
becomes  a  capable  worker  in  the  United  States — Capacity  of 
uncivilized  peoples  to  acquire  manufacturing  ability — The  part 
played  by  specialization  in  promoting  labor  efficiency — The 
habit  of  dependence  fatal  to  advancement — The  woes  of  the 
early  Virginians  brought  about  by  devotion  to  the  most  profit- 
able industry — Illustrations  derived  from  ancient  history — The 
fall  of  ancient  civilization  the  result  of  industrial  antagonisms — 
What  Greece  borrowed  from  the  civilizations  of  an  earlier  pe- 
riod— Division  of  labor  in  Ancient  Rome — Manufacturing  gen- 
erally practiced  throughout  the  Roman  Empire — The  dissemi- 
nation of  industrial  knowledge  by  Greeks  and  Romans — Ra- 
pidity with  which  Greek  colonists  established  industries  in  their 
new  homes — Gibbon's  mistaken  estimate  of  Russian  capacity — 
Statistics  showing  that  foreigners  form  the  bulk  of  the  operatives 
in  American  cotton  factories. 

Very  early  in  the  free  trade  discussion  it  was  perceived 
by  some  of  the  ablest  of  the  advocates  of  the  theory  that 
Providence  had  destined  Great  Britain  to  be  the  workshop 
of  the  world  that  an  answer  would  have  to  be  made  to  those 
who  argued  that  an  economic  waste  resulted  from  the  un- 
necessary movement  of  raw  and  finished  articles.  Accord- 
ingly the  efficiency  of  labor  idea  was  advanced  and  the  claim 
was  boldly  made  that  British  workingmen  were  naturally 
more  skillful  than  those  of  other  countries,  and  that  there- 
fore  it   would   be   true   economy   to   entrust   to   them   the 

238 


LABOR  EFFICIENCY.  239 

lucrative  business  of  converting  raw  products  into  finished 
articles. 

Curiously  enough  this  theory,  which  in  its  inception  was 
designed  to  fortify  the  British  contention  that  the  world 
would  profit  by  availing  itself  of  the  natural  superiority  of 
the  manufacturing  classes  of  Great  Britain,  is  now  made  to 
do  duty  in  explaining  away  the  damaging  fact  that  in  many 
lines  of  industry  Americans,  in  spite  of  the  high  protective 
tariff  which  it  was  confidently  asserted  would  prevent  any 
such  result,  are  enabled  to  produce  more  cheaply  than  the 
British.  Whenever  it  is  shown  that  the  United  States  can 
manufacture  an  article  more  cheaply  than  it  can  be  man- 
ufactured in  England  the  free  traders  hasten  to  explain  that 
it  is  due  to  the  greater  efficiency  of  American  labor. 

That  the  people  of  a  country  may  become  more  efficient 
as  producers  of  this,  that  or  the  other  article  is  doubtless  true, 
but  that  such  efficiency  is,  as  implied,  due  to  superior  natural 
ability  there  is  no  reason  to  believe.  It  would  perhaps  be 
a  mistake  to  assert  that  all  peoples  who  have  shown  the 
capacity  to  reach  the  civilized  stage  of  existence  are  equally 
capable  of  developing  their  industrial  qualities  to  the  highest 
point,  but  there  can  be  no  doubt  that  a  large  part  of  those 
now  considered  incapable,  if  the  artificial  obstacles  to  their 
advancement  were  removed,  could  attain  a  position,  by  the 
exercise  of  proper  efforts,  which  would  make  them  formid- 
able rivals  of  those  who  now  enjoy  supremacy  in  the  manu- 
facturing field. 

In  order  to  thoroughly  comprehend  the  nature  of  the 
misconceptions  underlying  the  theory  of  the  efficiency  of 
labor  it  will  be  well  to  examine  some  of  the  earlier  opinions 
of  the  Cobdenites  and  to  show  how  closely  they  resembled 
those  of  the  ancients,  who  also  appear  to  have  been  con- 
vinced that  a  political  boundary  in  some  inscrutable  manner 
made  those  living  within  it  more  skillful  and  apt  than 
those  who  had  the  misfortune  to  be  born  on  the  other  side  of 
the  border.     It  is  noteworthy  that  those  who  accepted  this 


240         PROTECTION   AND   PROGRESS 

idea  in  antiquity  and  those  who  have  attempted  in  the 
nineteenth  century  to  convert  the  term  "efficiency  of  labor" 
into  an  economic  formula  were  alike  unmindful  of  the  fact 
that  a  national  boundary  does  not  establish  that  all  those 
who  live  within  it  are  of  one  race.  When  Pliny  or  Athenaeus 
many  centuries  ago  spoke  of  the  skill  of  the  inhabitants 
of  a  particular  country  they  made  no  distinction  between 
the  various  races  subject  to  the  sovereign  under  whom 
they  lived.  The  products  of  Egypt  were  attributed  to 
Egyptian  skill,  although  they  may  have  been  due  to  the 
cunning  of  the  large  infusion  of  foreigners  who  made  that 
fertile  land  their  home.  In  the  same  way  Mr.  Mill  credits 
to  P)ritish  skill  all  the  productions  of  Great  Britain,  and 
similarly  to  American  skill  any  superiority  displayed  by  the 
workers  who  make  their  home  in  the  United  States. 

In  his  chapter  on  "Profits"  Mill  said:  "Labor,  though 
cheap,  may  be  inefficient.  In  no  European  country  are 
wages  so  low  as  they  are  (or,  at  least,  were)  in  Ireland, 
the  remuneration  of  an  agricultural  laborer  in  the  west  of 
Ireland  not  being  more  than  half  the  wages  of  even  the 
lowest  paid  Englishman,  the  Dorsetshire  laborer.  But  if 
from  inferior  skill  and  industry  two  days'  labor  of  an  Irish- 
man accomplished  no  more  work  than  an  English  laborer 
performed  in  one,  the  Irishman's  labor  cost  as  much  as  the 
Englishman's  though  it  brought  in  so  much  less  to  himself." 
In  the  following  paragraph  he  says,  contrasting  the  con- 
dition of  the  wage  earner  in  a  country  with  an  abundance 
of  land  and  his  state  where  the  land  is  overpeopled:  "The 
opposite  case  is  exemplified  in  the  United  States  of  America. 
The  laborer  there  enjoys  a  greater  abundance  of  comforts 
than  in  any  other  country  of  the  world,  except  some  of  the 
newest  colonies  ;  but  owing  to  the  cheap  price  at  which  these 
comforts  can  be  obtained  (combined  with  the  great  efficiency 
of  labor)  the  cost  of  labor  to  the  capitalist  is  considerably 
lower  than  in  Europe."* 

*Mill,  Principles  of  Political  Economy,  Book  II,  Chap.  XV. 


LABOR  EFFICIENCY.  241 

The  complicated  discussion  in  which  these  references 
to  efficiency  are  imbedded  may  divert  the  attention  of  the 
general  reader  from  the  fact  that  Mill  undoubtedly  assumed 
that  the  inferiority  of  Irish  laborers  was  due  to  a  race 
defect,  while  the  superiority  of  the  American  was  attributed 
by  him  to  some  natural  cause.  His  high  endorsement  of  the 
statement  of  Lord  Brassey,  which  has  become  an  economic 
classic,  that  the  British  navvies  taken  by  contractors  to 
foreign  countries  to  v/ork  on  railroads  were  infinitely  more 
efficient  than  the  natives  who  worked  by  their  side,  indicates 
that  he  also  believed  that  Britons  were  in  some  way  naturally 
better  fitted  for  such  occupations.  There  is  no  reason  to 
discredit  Lord  Brassey 's  statement  that  one  British  navvy 
performed  as  much  work  as  three  Orientals,  but  the  accept- 
ance by  Mill  of  the  implied  assumption  that  the  ability  of 
the  navvy  was  due  to  his  being  a  Briton  was  hasty  and  ill 
considered. 

That  the  navvy's  ability  is  wholly  an  acquired  one  and 
that  under  changed  conditions  the  Oriental  may  become 
equally  efficient  as  a  railroad  or  canal  builder  must  be  evi- 
dent to  anyone  who  has  given  the  subject  attention.  "Dr. 
Franckland,  in  his  "Comparative  Value  of  Foods,"  cites  a 
report  received  from  J.  Talmage  Wyckoff,  an  American 
stationed  at  Bastah,  at  the  head  of  the  Persian  Gulf,  who 
states  that  there  are  no  finer  specimens  of  human  physique 
to  be  found  than  are  characteristic  of  a  tribe  in  the  vicinity 
of  ancient  Nineveh.  Many  of  them  earn  a  livelihood  as 
laborers  on  the  light  draft  steamers  plying  on  the  river 
Tigris  from  Bagdad  to  Bastah.  They  carry  the  heaviest 
burdens  from  boat  to  shore,  bales  of  Manchester  cotton 
weighing  from  500  to  1,000  pounds  being  an  ordinary  load.* 
Is  there  any  reason  to  believe  that  laborers  capable  of  such 
performances  could  not  with  a  little  training  equal  the 
exploits  of  the  British  navvy,  who,  by  the  way,  may  have 

♦Talmage,  Article  "Rice,"  One  Hundred  Years  of  American  Com- 
merce. IQ 


242  PROTECTION   AND   PROGRESS 

been  an  Irishman  transplanted  from  his  own  soil,  where  the 
condtions  were  fatal  to  efficiency  of  labor,  to  some  place 
else  where  the  opportunity  was  afforded  him  to  test  and 
exercise  his  capabilities. 

It  has  been  wittily  remarked  that  "a  man  is  not  a  horse 
because  he  is  born  in  a  stable."  It  may  not  be  so  witty 
to  call  attention  to  the  fact  that  every  man  who  finds 
employment  in  this  country  is  not  an  American.  Yet  the 
economists,  when  the  efficiency  of  labor  question  is  being 
discussed,  invariably  assume  that  such  is  the  case.  As  an 
illustration  of  this  general  tendency  we  may  take  this  passage 
from  Mill :  "In  America  wages  are  much  higher  than  in 
England,  if  we  mean  by  wages  the  daily  earnings  of  a 
laborer ;  but  the  productive  power  of  American  labor  is  so 
great — its  efficiency,  combined  with  the  favorable  circum- 
stances in  which  it  is  exerted,  makes  it  worth  so  much  to 
the  purchaser  that  the  cost  of  labor  is  lower  in  America 
than  in  England,  as  is  proved  by  the  fact  that  the  general 
rate  of  profits  and  of  interest  is  very  much  higher."* 

Anyone  at  all  familiar  with  labor  conditions  in  the 
United  States  is  perfectly  aware  that  there  is  no  foundation 
for  the  assumption  that  the  greater  productiveness  of  a 
cotton  factory  in  this  country  is  due  to  the  superior  ability 
of  American  operatives,  for  it  is  notorious  that  our  weaving 
and  spinning  mills  are  filled  with  foreign-born  operatives 
who  attend  as  many  looms  or  machines  as  the  natives  work- 
ing by  their  side.  In  New  England  a  large  proportion  of  the 
workers  in  mills  are  French  Canadians,  and  so  far  as  we 
are  aware  nO'  distinction  is  made  between  them  and  the 
American  employes.  If  the  latter  have  displayed  any  greater 
ability  such  writers  as  Jacob  Schoenhoff  who  have  attempted 
to  elaborate  the  efficiency  of  labor  theory  have  not  mentioned 
the  fact.  They  simply  enlarge  on  the  output  and  show  that 
in  the  United  States  a  given  number  of  operatives  produce 

*Mill,  Principles  of  Political  Economy,  Book  III,  Chap.  XXV. 


LABOR  EFFICIENCY.  243 

more  cloth  than  a  similar  number  in  Great  Britain  or  any 
other  country,  and  from  that  fact  deduced  that  American 
labor  is  more  efficient,  hence  more  cheap  than  that  of  other 
countries. 

There  is  no  more  reason  for  this  assumption  than  there 
was  for  that  of  Mill  regarding  Irish  labor.  Transplanted 
to  this  country,  the  Irishman  has  by  some  means  become 
efficient.  As  a  farm  hand  he  displays  as  much  industry 
and  performs  the  tasks  assigned  to  him  with  the  same  facility 
as  other  workers.  When  Mulhall  pointed  out  that  "if  the 
economy  of  labor  was  as  well  understood  in  all  countries  as 
in  the  United  States,  where  each  farm  hand  cultivates  twenty- 
one  acres,  the  tilled  area  of  Europe  would  be  two  and  one- 
half  times  as  great  as  it  is,"  he  was  paying  a  tribute  to  the 
capacity  of  vast  numbers  of  Irishmen,  driven  from  their 
own  homes  by  the  hard  conditions  imposed  upon  them  by 
their  English  conquerors  to  this  country,  where  they  figure 
as  Americans.  The  Irishman  of  the  west  of  Ireland  who, 
according  to  the  statement  of  Mill,  "did  not  bring  more 
than  half  the  wages  of  even  the  lowest  paid  Englishman," 
when  he  put  his  foot  on  our  shore  suddenly  became  endowed 
with  such  capabilities  that  his  labor  was  regarded  as  more 
efficient  than  that  of  the  best  paid  English  farm  hand. 

There  is  undoubtedly  an  error  in  these  contradictory 
assertions.  The  Irishman  who  was  so  incapable  in  his  own 
land  as  to  not  deserve  half  the  wages  paid  to  the  most 
poorly  compensated  farm  laborer  of  England  could  hardly 
have  been  converted  by  the  simple  process  of  crossing  the 
ocean  into  a  more  efficient  laborer  than  the  best  England 
could  boast.  There  must  be  some  other  explanation  of  the 
fact  that  laborers  are  better  paid  in  the  United  States  than 
in  England  and  that  those  of  England  receive  a  greater 
compensation  than  their  fellows  gain  on  the  Continent  than 
that  afforded  by  the  dubious  term  "efficiency  of  labor," 
which  always  carries  with  it  the  implication  that  the  greater 
or  less  efficiency  exhibited  is  due  to  racial  causes.     The 


244         PROTECTION   AND   PROGRESS 

errors  for  which  the  misuse  of  the  term  is  responsible  are 
so  numerous  and  so  serious  it  becomes  the  duty  of  the 
economist  to  thoroughly  examine  them.  This  duty  is  made 
all  the  more  imperative  because  erroneous  assumptions  of 
this  kind  have  a  tendency  to  retard  universal  progress  by 
crystallizing  the  belief  that  obstacles  which  are  easily  re- 
moved by  patient  application  are  natural  defects.  It  is  well, 
therefore,  to  attempt  to  dispel  an  error  the  acceptance  of 
which  would  deter  capable  peoples  from  putting  forth  their 
best  endeavors  to  acquire  and  practice  all  the  known  arts. 

Reflection  will  satisfy  the  candid  inquirer  that  the  accept- 
ance of  the  theory  of  labor  efficiency  as  interpreted  by  the 
Cobdenites  would  prove  a  fatal  barrier  to  the  acquisition 
of  manufacturing  skill  by  a  backward  people.  If  the  assump- 
tion that  the  Americans  or  the  English  are  the  possessors 
of  a  natural  quality  which  other  peoples  could  never  hope 
to  artificially  acquire  was  sound,  and  the  doctrine  that  true 
economy  demands  that  a  people  who  cannot  manu- 
facture as  cheaply  as  those  who  are  supposed  to 
enjoy  the  natural  superiority  was  unconditionally  accepted, 
the  possessors  of  the  assumed  natural  advantage  would  enjoy 
a  perpetual  monopoly.  But  there  is  absolutely  no  foundation 
for  the  belief  that  one  set  of  people  may  perpetually  enjoy 
an  advantage  over  others  in  manufacturing  because  of 
natural  superiority ;  the  evidence  is  entirely  one-sided  on  this 
point,  and  it  shows  conclusively  that  the  most  skillful  peoples 
are  those  who  practice  arts  inherited  from  remote  ancestors 
who  acquired  their  skill  with  infinite  toil  and  pains,  and  that 
their  heirs  are  constantly  adding  to  their  knowledge.  The 
testimony  is  equally  conclusive  that  all  the  races  which  have 
reached  the  stage  we  regard  as  civilized  are  capable  of 
advancement,  and  that  some  peoples  still  in  a  state  of 
barbarism  bordering  on  savagery,  and  others  in  an  entirely 
savage  condition,  may  speedily  be  converted  into  skilled 
artisans.  The  instances  of  African  negro  slaves  acquiring 
civilized  arts  are  not  rare,  and  where  the  individuals  show 


LABOR  EFFICIENCY.  245 

a  capacity  to  acquire,  the  inference  is  fair  that  the  whole  race 
may  lift  itself  up. 

Professor  Taussig,  in  a  recent  discussion,  uses  an  illus- 
tration which  suggests  why  certain  peoples  advance  and 
others  remain  stationary.  "A  set  of  porters,"  he  says, 
"making  a  profession  of  carrying  packs  develop  their  muscles 
and  wind  to  an  extraordinary  degree  and  become  capable 
of  carrying  those  heavy  burdens  which  astonish  travelers 
in  backward  countries.  Yet  their  achievements  are  as  noth- 
ing compared  with  those  of  the  successive  divisions  of  labor. 
When  one  set  of  men  attend  to  the  making  of  roads,  another 
to  the  rearing  of  horses,  another  to  the  procuring  of  iron 
and  timber,  others  to  wheels,  wagons,  harness — we  get  in 
the  end,  through  transportation  by  wheeled  vehicles,  an 
enormous  diminution  in  the  labor  required  for  a  given 
result."* 

If  we  pursue  the  subject  further  we  shall  find  that  the 
nations  containing  the  men  capable  of  carrying  great  burdens 
on  their  backs  and  who  make  no  effort  to  change  the  system 
of  transportation  are  tacitly  accepting  the  doctrines  of  Cob- 
denism.  The  countries  in  which  they  flourish  are  exclu- 
sively those  which  consciously  or  unconsciously  act  on  the 
assumption  that  it  would  be  impossible  for  them  to  compete 
with  nations  having  established  industries.  No  people  im- 
bued with  the  idea  of  self-dependence  could  fail  to  evolve 
those  divisions  of  labor  which  are  essential  to  the  production 
of  a  vehicle  to  take  the  place  of  the  pack;  and  it  may  be 
added  that  the  desire  and  the  determination  to  overcome  the 
drawbacks  of  packing  must  be  present  in  order  to  effect  a 
transition  to  the  easier  and  more  serviceable  mode  of  trans- 
portation. 

That  this  desire  is  not  always  present  in  peoples  belong- 
ing to  advanced  nations,  or  that  it  may  easily  be  repressed  by 
habits  of  dependence,  is  shown  by  the  experience  of  the 


'Taussig,   Capital  and  Labor,  p. 


246  PROTECTION    AND    PROGRESS 

Virginian  colonists  already  cited.  "It  would  be  inferred," 
says  a  modern  historian,  "from  the  inventories  of  that  period 
that  there  was  no  vehicle  in  Virginia  in  the  seventeenth 
century  resembling  a  carriage,  but  from  other  sources  it  is 
learned  that  this  means  of  locomotion  was  not  unknown 
to  the  colony.  Such  a  vehicle  seems  to  have  been  in  the 
possession  of  a  few  very  wealthy  persons."*  Here  we  have 
the  spectacle  of  a  colony  composed  of  men  from  one  of  the 
most  advanced  of  European  states,  transplanted  to  a  country 
abounding  in  all  the  requirements  which  Taussig  indicates 
are  necessary  to  the  growth  of  the  more  convenient  sort  of 
transportation — the  best  of  timber,  iron  in  abundance,  skins 
and  hides  which  might  be  employed  in  harness  making — 
neglecting  them  to  such  an  extent  that  carriages  were  a 
rarity  a  century  or  more  after  the  planting  of  the  colony. 

Not  only  were  the  means  of  transportation  deficient  in 
this  colony,  but  the  people,  through  their  habit  of  depend- 
ence, actually  lost  the  knowledge  of  the  simplest  manufac- 
turing arts.  They  were  so  wholly  devoted  to  the  production 
of  a  single  crop — thus  strictly  conforming  to  the  advice  of 
the  modern  economists,  for  it  was  certainly  more  profitable 
at  the  time  to  produce  tobacco  in  Virginia  than  to  engage  in 
other  pursuits — that  they  were  compelled  to  import  from 
abroad  the  commonest  articles  of  household  use.  They  ate 
from  wooden  trenchers  made  in  England  from  timber  im- 
ported from  the  colonies  and  re-exported  in  the  form  of  fin- 
ished articles,  and  actually,  though  surrounded  with  forests, 
swept  tiieir  floors  with  British-made  birchen  brooms.  So 
destructive  to  all  manufacturing  progress  was  the  habit  of 
dependence  that  as  late  as  the  eighteenth  century  the  colonists 
of  Virginia  were  unable  to  produce  the  commonest  woolen 
cloths.  What  little  cloth  was  woven  was  inferior,  and  it  was 
never  made  except  under  the  spur  of  necessity.  The  people 
were  so  disinclined  to  manufacturing  and  made  so  little  effort 

♦Bruce,  Economic  History  of  Virginia,  Vol.  II,  p.  238. 


LABOR  EFFICIENCY.  247 

to  acquire  skill  that  even  when  suffering  from  the  effects  of 
the  overproduction  of  their  single  staple — tobacco — it  did 
not  occur  to  them  that  their  hard  condition  might  be  relieved 
by  turning  their  attention  to  other  industries. 

In  this  case  of  retrogression  we  have  an  illustration  which 
abundantly  confirms  the  theory  that  a  people,  no  matter  what 
their  origin  or  how  far  advanced  they  may  be,  if  they  wisb 
to  attain  wealth  and  power  must  encourage  an  industrial 
system  which  promotes  local,  state  or  national  independ- 
ence. Dependence  upon  one  or  a  few  resources  is  fatal  to 
progress ;  complete  integration  is  the  goal  a  nation  should 
aim  at.  That  it  can  be  reached  by  every  people  capable  of 
conceiving  a  desire  for  industrial  independence,  and  who  at 
the  same  time  are  provided  with  essentive  natural  resources, 
there  can  be  no  doubt. 

History,  ancient  and  modern,  if  taken  in  its  broader 
aspect,  is  one  continuous  recital  of  the  efforts  of  peoples  to 
achieve  industrial  independence  and  of  other  nations  to  check 
the  effort  to  bring  about  such  a  result.  In  the  very  dawn  of 
Roman  national  life  we  discover  traces  of  commercial  strug- 
gles of  this  kind.  The  first  treaty  of  peace  consummated  be- 
tween Carthage  and  Rome  has  the  impress  of  a  commercial 
settlement.  By  it  the  Romans  "obtained  the  privilege  of 
freely  trading  like  other  nations  in  Sicily,  so  far  as  it  was 
Carthaginian ;  and  in  Africa  and  Sardinia  they  obtained  at 
least  the  right  to  dispose  of  their  merchandise  at  a  price  fixed 
with  the  concurrence  of  the  Carthaginian  community."  and 
"the  privilege  of  free  trading  seems  to  have  been  granted 
to  the  Carthaginians  at  least  in  Rome,  and  perhaps  in  all 
Latium."* 

Mommsen,  commenting  on  the  fall  of  civilizations  ante- 
rior to  that  of  Rome,  says  their  fate  "was  but  the  fulfillment 
of  an  unchangeable  and  therefore  endurable  destiny."  Per- 
haps he  was  right  in  this  assumption,  but  it  is  doubtful 

♦Mommsen,  History  of  Rome,  Book  II,  Chap.  VII. 


248         PROTECTION   AND   PROGRESS 

whether  the  reader  of  his  learned  liisory  will  draw  the  con- 
clusion without  having  pointed  out  to  him  that  the  fate  which 
overtook  the  ancient  civilizations  was  in  almost  every  in- 
stance the  result  of  trade  antagonisms,  and  not  due  to  a  mere 
lust  for  conquest,  as  is  generally  assumed.  No  acute  stu- 
dent can  fail  to  discover  that  it  was  the  pressure  of  popula- 
tion which  converted  the  Romans  into  an  aggressive  and 
conquering  nation,  nor,  if  he  examines  closely,  can  he  escape 
the  inference  that  it  was  the  tendency  of  the  people  who  arc 
mostly  thought  of  as  a  nation  of  warriors  to  absorb  all  the 
profits  of  industry  in  the  ancient  world.  No  more  egregious 
error  exists  than  that  contained  in  the  assumption  that  the 
Roman  object  was  the  military  conquest  of  foreign  peoples 
for  the  purpose  of  stripping  and  taxing  the  conquered  peo- 
ples. Doubtless  the  demands  of  the  government  upon  the 
provinces  were  often  excessive,  but  the  evidence  is  over- 
whelming that  the  chief  purpose  of  the  conquerors  was  the 
extension  of  Roman  trade. 

It  would  require  too  much  space  to  fully  demonstrate  the 
commercial  character  of  the  Romans  and  to  show  how  com- 
pletely their  military  operations  were  dominated  by  the  neces- 
sity of  affording  opportunities  to  a  growing  population  for 
industrial  expansion.  The  discussion  would  be  an  inter- 
esting one,  but  the  relation  of  the  story,  while  it  might 
strengthen  the  argument  that  the  history  of  the  world  is 
merely  a  narration  of  the  industrial  evolution  of  nations,  is 
not  absolutely  essential.  We  may  accept  the  views  generally 
expressed  by  historians  and  still  find  abundant  evidence 
that  since  the  dawn  of  history  there  has  been  an 
unceasing  effort  on  the  part  of  peoples  devoid  of  skill  to 
acquire  the  arts  which  they  clearly  perceived  made  rivals  who 
possessed  them  more  wealthy  and  powerful.  No  one  can 
read  the  account  of  the  growth  of  great  states  from  feeble 
beginnings  without  realizing  that  the  advances  in  most  cases 
were  the  result  of  industrial  imitation.  The  story  disclosed 
to  us  by  the  discoveries  in  the  Mycenaean  and  Trojan  ruins 


LABOR  EFFICIENCY.  249 

is  a  narrative  of  the  transference  of  the  arts  of  the  Orient  to 
the  West,  a  trifle  obscure  at  present,  but  on  the  whole  suf- 
ficiently distinct  to  enable  us  to  comprehend  that  much  of 
the  Greek  many-sidedness  of  a  later  period  was  inherited  and 
not  indigenous. 

"As  long  as  we  had  evidence,"  says  Professor  Manatt, 
who  made  a  special  study  of  Mycenaean  civilzation,  "only  in 
Schliemann's  city,  strong  and  opulent  indeed,  but  insignifi- 
cant in  size,  and  with  everything  to  show  an  infinitely  earlier 
stage  of  culture — it  required  truly  eclectic  fancy  to  set  the 
Epic  antagonists  face  to  face.  Today,  however,  that  Burnt 
City  is  important  mainly  as  a  witness  that  perhaps  a  thousand 
years  before  Mycenae  was  built  the  Hissarlik  hill  was  already 
a  seat  of  ancient  power,  so  that  the  larger,  stronger  Troy  we 
now  know  was  at  once  the  heir  of  the  hoary  East,  and  flour- 
ishing at  the  very  moment  when  we  find  Mycenae  in  her 
golden  prime."* 

Mycenae,  according  to  Arthur  J.  Evans,  played  a  part  in 
molding  European  arts  which  it  would  be  difficult  to  exag- 
gerate ;  or,  as  we  prefer  to  put  it,  the  different  peoples  of  the 
world  with  whom  the  Mycenaeans  came  into  contact  worked 
out  their  destinies  by  appropriating  the  ideas  and  imi- 
tating the  achievements  of  the  Mycenaeans.  Evans  says : 
"Beyond  the  limits  of  its  original  seats  primitive  Greece  and 
its  islands  and  the  colonial  plantations  thrown  out  by  it  to 
the  west  coast  of  Asia  Minor,  to  Cyprus  and  in  all  probability 
to  Egypt  and  Syria,  we  can  trace  the  direct  diffusion  of  M)^- 
cenaean  products,  notably  ceramic  wares,  across  the  Danube 
to  Transylvania  and  Moldavia.  The  Mycenaean  impress  is 
very  strong  in  southern  Italy  and  Sicily.  More  isolated 
Mycenaean  relics  have  been  found  still  further  afield  in  Spain 
and  even  the  Auvergne,  where  Dr.  Montelius  has  recognized 
an  old  trade  connection  between  the  Rhone  valley  and  the 
Eastern  Mediterranean  in  two  bronze  double  axes  of  the 
Aegean  form." 

*^anatt,  Mycenean  Age,  p.  360. 


250         PROTECTION   AND   PROGRESS 

We  do  noL  need  to  inquire  too  closely  whether  the  bronze 
double  axes  referred  to  by  Montelius  were  passed  into  the 
valley  of  the  Rhone  directly  by  the  Mycenaeans  or  whether 
they  reached  the  people  of  that  region  by  the  roundabout 
course  of  trade.  The  Phoenicians  who  carried  the  wares  of 
their  own  and  those  of  other  countries  afar  by  sea  may  have 
passed  these  evidences  of  early  Aegean  skill  to  a  port  on  the 
Mediterranean  from  whence  they  may  have  found  their  way 
to  the  interior.  The  only  point  sought  to  be  made  is  that 
the  Auvernians,  whom  the  Romans  were  pleased  to  designate 
as  barbarians,  were  not  slow  to  borrow  and  practice  the  arts 
brought  to  them  by  strangers. 

Caesar  commented  upon  the  peculiar  skill  displayed  by  the 
Celts  in  imitating  any  model  or  executing  any  instruction 
issued  by  him,*  and  Mommsen  tells  us  that  "the  Auvernians 
had  attained  to  extraordinary  wealth,  and  that  they  had  a 
comparatively  high  standard  of  civilzation"  before  the  Ro- 
man occupation  of  their  territory. f 

It  is  evident  that  the  German  scholar,  who  doubtless  at- 
tempted to  do  the  Celts  justice,  underrated  their  achieve- 
ments. But  his  investigations  and  conclusions  are  far  reach- 
ing enough  to  establish  the  fact  that  Gaul  had  advanced  suf- 
ficiently before  her  absorption  into  the  Roman  Empire  to 
work  out  her  industrial  destiny,  and  that  the  country 
owed  less  to  the  conqueror  than  is  generally  supposed  by 
those  who  accept  the  vague  and  glittering  phrase  that  the 
Roman  arms  carried  civilization  to  barbarous  peoples.  When 
Mommsen  tells  us  that  the  Romans  "reaped  the  benefit  of 
the  respectable  beginnings  of  Hellenic  civilization  in  Gaul," 
and  that  "trade  and  commerce  paved  the  way  for  conquest,"! 
we  have  a  right  to  assume  that  these  respectable  beginnings 
— it  is  absurd  to  speak  of  them  as  beginnings — would  have 

*Csesar's  Commentaries. 

■j- Mommsen,  History  of  Rome,  Book  IV,  Chap.  V. 

{Ibid,  Book  V,  Chap.  VII. 


LABOR  EFFICIENCY.  251 

led  to  a  development  as  useful  as  that  of  the  conqueror  if 
they  had  not  been  interfered  with. 

We  are  confirmed  in  this  impression  when  we  turn  to  an- 
cient writings.  The  works  of  Strabo  abound  in  references 
to  the  industrial  achievements  of  peoples  we  are  too  apt  to 
consider  as  being  little  better  than  savages  at  the  time  Rome 
subjected  them  to  her  power.  In  assuming  that  Rome  car- 
ried the  arts  and  civilization  to  Gaul  and  Spain  we  overlook 
the  fact  that  Pliny  describes  his  countrymen  as  "a  people 
which  has  never  shown  itself  slow  to  adopt  all  useful  arts."* 
All  is  a  very  comprehensive  word  and  appears  to  have  been 
used  understandingly  by  Pliny,  who  does  not  permit  us  to 
retain  the  impression  that  Rome  borrowed  solely  from  Greece 
and  Egypt.  He  makes  numerous  allusions  to  the  Gallic  and 
Spanish  proficiency  in  agriculture  and  in  manufacturing. 
In  places  Pliny  manifests  a  propensity  to  dwell  upon  the  real 
or  fancied  superiority  of  certain  localities  in  the  prosecution 
of  a  particular  art,  but  it  is  clear  that  he  thoroughly  under- 
stood that  the  advantages  he  described  were  in  almost  every 
case  artificial,  and,  as  they  were  not  due  to  racial  qualities, 
could  be  easily  imitated. 

It  has  been  remarked  that  the  ancients  developed  no 
science  of  political  economy.  The  observation  is  measura- 
bly true,  but  there  is  a  vast  body  of  writing  that  has  come 
down  to  us  from  antiquity  which  if  carefully  studied  may 
yield  as  good  results  as  though  the  writers  had  attempted  to 
formulate  axioms  which  every  day  practice  shows  are  not  to 
be  depended  upon  as  accurate.  Pliny's  "Natural  History" 
is  notably  full  of  information  wdiich  exhibits  clearly  why 
nations  in  ancient  times  were  enabled  to  maintain  a  monopoly 
in  certain  lines  of  manufacture.  The  chief  cause  was  un- 
doubtedly the  resort  to  division  of  labor.  Although  the  an- 
cient economists  did  not,  like  Adam  Smith,  develop  the  idea 

*Pliny,  Natural  History,  Book  XXIX,  Chap.  V. 
fGeorge,  Science  of  Political  Economy,  p.  133. 


252         PROTECTION   AND   PROGRESS 

that  division  of  labor  adds  enormously  to  its  efficiency,  there 
is  no  doubt  that  its  value  was  thoroughly  understood  and 
that  it  was  practiced  in  ancient  Rome. 

Pliny  tells  us  that  "Aegina  was  particularly  famous  for 
the  manufacture  of  sockets  only  for  lamp  stands,  as  Taren- 
tum  was  of  that  for  branches;  (and  that)  the  most  complete 
articles  were  therefore  produced  by  the  union  of  the  two."* 
Here  we  have  as  pronounced  a  case  of  minute  subdivision  of 
labor  as  the  assembling  in  modern  times  of  bicycle  parts  im- 
plies. Tarentum  and  Aegina  were  cities  far  apart ;  the  for- 
mer was  in  southern  Italy  and  the  latter  was  an  emporium  in 
one  of  the  islands  of  the  Grecian  archipelago.  They  were 
both  celebrated  as  manufacturing  centers  long  before  the 
beginning  of  the  Christian  era.  Aegina,  six  centuries  before 
the  days  in  which  Pliny  flourished,  had  commenced  her  ca- 
reer, and  Tarentum,  the  leading  city  of  Magna  Graecia,  with 
wealth  and  power  enough  to  be  a  thorn  in  the  side  of  Rome 
in  the  first  Punic  war,  had  a  continuous  commercial  develop- 
ment during  the  eight  centuries  which  followed  its  coloni- 
zation. 

It  is  not  surprising  that  these  two  manufacturing  centers 
should  have  carried  out  in  practice  the  ideas  which  Smith 
has  illustrated  in  his  passage  on  the  division  of  labor.  Their 
inhabitants  were  ingenious  and  great  capitals  had  been  ac- 
cumulated by  some  of  them,  who  saw  that  profit  would  be 
derived  from  specialization.  Accordingly,  we  find  the 
Acgeans  and  the  Tarentines  devoting  themselves  to  the  man- 
ufacture of  parts  of  lamps,  which  were  shipped  to  all  the 
provinces  of  the  Roman  Empire  just  as  the  parts  of  bicycles 
are  shipped  from  this  country  to  England,  France  and  other 
countries  to  be  assembled,  the  process  in  the  one  case  being  a 
cheaper  lamp  and  in  the  later  instance  a  cheaper  and  better 
wheel  than  could  be  turned  out  if  it  were  wholly  constructed 
in  one  factory. 

*Pliny,  Natural  History,  Book  XXXIV,  Chap.  VI. 


LABOR  EFFICIENCY.  253 

The  practice  of  the  people  of  Aegina  and  Tarentum  was 
not  pecuhar  to  them.  There  is  unmistakable  evidence  in  the 
scores  of  allusions  found  in  the  writers  of  antiquity  to  the 
skillfulness  of  particular  populations  in  certain  industries. 
It  is  unnecessary  to  pile  up  quotations  to  demonstrate  this,  or 
to  deduce  from  them  that  the  skill  was  the  result  of  acquired 
ability  and  not  of  natural  advantages.  When  we  inquire 
why  the  Phoenicians  became  so  proficient  in  the  art  of  dyeing 
we  may  at  first  incline  to  the  belief  that  the  proximity  of 
Tyre  to  supplies  of  the  shellfish  from  which  the  matter  for 
the  famed  purple  was  extracted  explains  their  long  main- 
tained superiority.  But  further  investigation  soon  discovers 
that  comparatively  early  the  Phoenicians  were  compelled  to 
go  far  afield  for  their  supply  of  murex.  The  shores  of  nu- 
merous islands  and  the  coasts  of  Italy  abounded  in  them,  and 
for  a  long  time  these  shells  formed  the  return  cargoes  of 
Tyrian  vessels.  No  doubt  the  tenacity  with  which  trade 
secrets  were  guarded  in  antiquity  helped  the  Phoenicians  to 
retain  their  monopoly  for  some  time,  but  they  could  not  pre- 
serve their  advantage  when  the  Romans  and  their  other 
rivals  began  to  perceive  that  they  too  might  share  the  profits 
arising  from  the  lucrative  business  of  coloring  cloths. 

We  so  constantly  think  of  the  Romans  of  antiquity  as  a 
military  people  that  we  are  inclined  to  underrate  their  enter- 
prise, and  are  apt  to  suppose  that  they  always  remained  de- 
pendent upon  foreigners  for  their  suppHes  of  manufactured 
articles.  But  evidence  such  as  the  following  ought  to  con- 
vey an  entirely  different  impression  and  will  help  establish 
the  correctness  of  the  contention  that  the  true  explanation  of 
the  greater  efficiency  of  labor  in  certain  localities  is  not  owing 
to  race  characteristics,  but  is  due  to  entirely  different  causes, 
most  of  them  wholly  artificial.  Speaking  of  the  caprices  of 
fashion,  Pliny  says :  "It  was  not  sufficient  to  have  borrowed 
from  a  precious  stone  the  name  of  amethyst  for  a  dye,  but 
when  we  have  obtained  this  color  we  must  drench  it  over 
again  with  Tyrian  tints,  so  that  we  may  have  an  upstart 


254         PROTECTION  AND  PROGRESS 

name  compounded  of  both  and  at  the  same  time  a  twofold 
display  of  luxury ;  for  as  soon  as  ever  people  have  succeeded 
in  obtaining  the  conchyliated  color  they  inmiediately  think  it 
will  do  better  as  a  state  of  transition  to  the  Tyrian  hues. 
There  can  be  little  doubt  that  this  invention  was  due  to 
some  artist  who  happened  to  change  his  mind  and  alter  a 
tint  with  which  he  was  not  pleased;  hence  a  system  has 
taken  its  rise,  and  spirits  ever  on  the  rack  for  creating  won- 
ders have  transformed  what  was  originally  a  blunder  into 
something  quite  desirable."* 

We  are  not  concerned  about  the  speculation  of  Pliny  re- 
garding the  origin  of  the  system  of  multiplying  shades  of 
color.  It  may  have  been  accidental,  as  he  suggests,  but  it  is 
far  more  probable  that  it  was  the  result  of  deliberate  investi- 
gation of  the  properties  of  substances  capable  of  being  em- 
ployed as  dyes.  The  great  number  of  mineral,  vegetable  and 
animal  dyes  and  paints  known  to  the  Romans  of  Pliny's  time, 
and  the  ingenuity  displayed  in  their  use,  shows  that  what  is 
alluded  to  as  a  system  bears  a  remarkable  resemblance  to  the 
modern  scientific  processes  of  chemists  who  make  dyes  a 
specialty.  It  is  noteworthy  in  this  connection  that  Pliny  ex- 
plains his  reason  for  making  copious  references  to  the  art 
of  dyeing  by  saying  that  he  should  not  have  omitted  to  en- 
large upon  the  matter,  even  though  he  had  "found  that  dye- 
ing had  been  looked  upon  as  forming  one  of  our  liberal 
arts."t  From  this  statement  and  other  allusions  we  infer 
that  the  Romans  not  only  imitated  the  Phoenician  art  of  dye- 
ing, but  that  they  greatly  developed  it  and  finally  eclipsed 
their  teachers.  In  short,  having  adopted  the  idea  that  they 
were  as  capable  of  coloring  fabrics  as  the  assumed  origi- 
nators of  the  famous  purple  dye  of  antiquity,  the  Romans, 
in  a  comparatively  short  period,  succeeded  in  destroying  the 
Tyrian  monopoly,  a  work  in  which  they  were  assisted  by 
other  energetic  peoples  of  the  period. 

*Pliny,  Natural  History,  Book  IX,  Chap.  LXIV. 
fPliny,  Natural  History,  Book  XXH,  Chap,  III. 


LABOR  EFFICIENCY.  255 

It  may  be  asserted  with  confidence  that  the  success 
achieved  by  the  Romans  in  the  art  of  dyeing-  was  matched  by 
their  achievements  in  other  fields  of  industry.  The  enor- 
mous expansion  of  the  territorial  area  of  the  empire  caused 
something  hke  a  uniform  development  of  manufacturing 
throughout  its  length  and  breadth.  Turning  again  to  Pliny 
we  find  this  assumption  supported  in  an  extended  description 
of  the  linen  industry.  "The  Cadurci,  the  Caleti,  the  Ruteni, 
the  Bitureges  and  the  Morini  *  *  *  the  whole  of  the 
Gallic  provinces,  in  fact,"  he  says,  "are  in  the  habit  of  weav- 
ing sail  cloth  ;  and  at  the  present  day  our  enemies  even  who 
dwell  beyond  the  Rhenus  have  learned  to  do  the  same.  In- 
deed,there  is  no  tissue  that  is  more  beautiful  in  the  eyes  of  the 
female  than  linen.  I  am  here  reminded  of  the  fact  *  *  * 
that  in  Germany  it  is  in  caves  deep  under  ground  that 
the  linen  weavers  ply  their  work,  and  the  same,  too,  is  the 
case  in  the  Allan  territory  in  Italy,  between  the  rivers  Padus 
and  Ticinus,  the  linen  of  which  holds  the  third  rank  among 
the  kinds  manufactured  in  Europe,  that  of  Saetabis  (Spain) 
claiming  the  first,  and  those  of  Retorium  and  of  Tarentia  in 
the  vicinit}^  of  Alia  on  the  Aemilian  way  the  second  place  in 
general  estimation.  The  linens  of  Faventia  are  preferred  for 
whiteness  to  those  of  Alia,  which  are  always  unbleached ; 
those  of  Retorium  are  remarkable  for  their  extreme  fineness, 
combined  with  substance,  and  are  quite  equal  to  the  linens  of 
Faventia  in  whiteness,  but  they  have  none  of  that  fine  downy 
nap  upon  them  which  is  so  highly  esteemed  by  some  per- 
sons, though  equally  disliked  by  others.  *  *  *  g^^i-  i|- 
is  the  province  of  nearer  Spain  that  produces  linen  of  the 
greatest  luster,  an  advantage  which  is  owing  to  a  stream 
which  washes  the  city  of  Tarraco  there.  The  fineness  of  this 
linen,  too,  is  quite  marvelous,  and  here  it  is  that  the  fi'^st  man- 
ufacture of  cambric  was  established.  From  the  same  prov- 
ince, too,  of  Spain,  the  flax  of  Zoela  has  of  late  been  intro- 
duced into  Italy  and  has  been  found  extremely  serviceable 
for  the  manufncturc  of  huntinsf  nets.     Before  now  we  have 


256         PROTECTION   AND   PROGRESS 

seen  some  of  these  toils  of  a  fineness  so  remarkable  as  to  al- 
low of  being  passed  through  a  man's  ring,  running  ropes 
and  all,  a  single  individual  being  able  to  carry  enough  nets 
to  environ  a  whole  forest.  This,  however,  is  not  very  sur- 
prising, but  it  is  really  quite  wonderful  that  each  of  the  cords 
was  comprised  of  not  less  than  150  threads."* 

No  one  can  read  this  passage  without  concluding  that 
throughout  the  vast  extent  of  the  Roman  Empire  the  art  of 
manufacturing  linen  was  generally  understood  and  practiced. 
There  are  suggestions  that  certain  towns  or  localities  ex- 
celled in  particular  branches,  but  the  only  inference  to  be 
drawn  from  them  is  that  the  art  had  in  those  places  been 
carried  to  a  higher  degree  of  perfection  by  specialization 
resulting  from  long  experience,  and  that  the  investment  of 
capital  had  intrenched  the  business.  There  is  only  one  allu- 
sion to  a  natural  advantage,  that  said  to  have  been  enjoyed 
by  Tarraco,  whose  river  water  was  supposed  to  possess  valua- 
ble properties,  but  it  is  obvious  that  it  was  not  the  superior 
water  which  gave  that  center  its  lead ;  it  was  the  fact  that 
the  Tarracans  had  great  experience,  an  assumption  borne 
out  by  the  statement  that  Tarraco  was  credited  with  being  the 
originator  of  cambric. 

If  we  investigate  the  condition  of  other  industries  of 
antiquity  we  find  records  of  a  similar  state  of  diffusion.  Not 
only  in  the  Roman  provinces  mentioned,  but  in  all  others, 
manufacturing  seemed  to  flourish.  This  being  so,  we  have  a 
right  to  assume  that  all  of  the  peoples  in  the  vast  dominions 
of  Rome,  and  those  with  whom  the  Romans  had  relations, 
had,  before  Pliny's  time,  shown  themselves  capable  of  creat- 
ing a  domestic  manufacturing  industry,  and  that  the  habit  of 
industrial  dependence  was  not  a  feature  of  antiquity.  If  this 
idea  is  firmly  grasped  many  of  the  difficulties  which  his- 
torians have  created  for  themselves  will  disappear.  We  need 
only  extend  it  a  trifle  to  permit  the  belief  that  the  term  bar- 

*Pliny,  Natural  History,  Boox  XIX,  Chap.  II. 


LABOR  EFFICIENCY.  257 

barian  applied  to  the  Goths  was  not  a  synonym  of  "sav- 
agery," and  that  they  were  barbarians  only  in  the  sense  that 
they  were  foreigners  to  Rome.  After  reading  the  harrow- 
ing accounts  of  the  cruelties  to  which  the  Romans  were  sub- 
jected by  the  Gothic  invader  we  are  confused  to  learn  that 
"in  less  than  seven  years  the  vestiges  of  the  Gothic  invasion 
were  almost  obliterated,  and  the  city  (Rome)  appeared  to 
assume  its  former  splendor  and  tranquillity."*  The  Romans 
must  have  possessed  extraordinary  recuperative  powers  to 
have  accomplished  the  feat  of  completely  restoring  their  city 
in  so  brief  a  period,  or  the  injuries  perpetrated  by  the  Goths 
must  have  been  grossly  exaggerated. 

That  the  latter  was  tlie  case  is  doubtless  true.  The  vic- 
torious Goths  exacted  a  heavy  indemnity,  but  probably  not  so 
great  as  that  recently  extorted  from  France  by  Germany. 
The  ravages  of  the  Goths  were,  perhaps,  not  more  extensive 
than  those  committed  by  modern  soldiers  after  the  reduction 
of  a  wealthy  capital.  To  form  an  estimate  of  the  qualities 
and  the  capacities  of  a  people  by  their  acts  in  war,  as  many 
historians  have  done,  is  absurd.  If  that  were  the  rule  a  for- 
midable indictment  could  be  framed  against  the  British  and 
French.  The  story  of  tlie  looting  of  Pekin  does  not  differ 
essentially  from  that  of  the  sacking  of  Rome  by  the  Goths. 
The  soldiers  representing  the  two  most  enlightened  nations 
of  modern  times  when  they  sacked  the  palaces  of  the  Chinese 
did  not  go  about  their  work  after  the  fashion  of  art  connois- 
seurs. They  thought  more  of  the  gold  and  silver  which  en- 
tered into  or  adorned  an  object  secured  by  them  as  plunder 
than  of  the  genius  which  created  it,  and  so  did  the  Goths. 

At  any  rate,  these  people,  whether  savages  or  not.  are,  a 
little  later,  found  creating  an  art  of  their  own.  They  appear 
in  Spain  and  are  welcomed  by  the  natives,  who  regard  their 
advent  as  a  desirable  change  from  the  oppressions  of  their 
Roman  rulers,  which  would  be  singular  if  they  were  merely 


♦Gibbon,   Hiistorv  of  Rome    ■p.ohn,  Chap.  XXXI,  Vol.  Til.  p.  458. 
17 


258         PROTECTION   AND   PROGRESS 

savages  come  to  ravage  the  land.*  Three  centuries  after  the 
invasion  of  the  Spanish  province  "the  Goths,"  we  are  told, 
"were  no  longer  the  victorious  barbarians  who  had  humbled 
the  pride  of  Rome,  despoiled  the  Queen  of  Nations  and  pen- 
etrated from  the  Danube  to  the  Atlantic  ocean.  Secluded 
from  the  world  by  the  Pyrennean  mountains,  the  successors 
of  Alaric  had  slumbered  in  a  long  peace ;  the  walls  of  the 
cities  were  moldered  into  dust;  the  youth  had  abandoned 
the  exercise  of  arms ;  and  the  presumption  of  their  ancient 
renown  would  expose  them  in  a  field  of  battle  to  the  first 
assault  of  the  invaders. "f  Remarkable  savages  these.  The 
progress  made  by  them  in  three  hundred  years  is  marvelous 
enough  to  deserve  the  study  of  evolutionists  who  believe  that 
the  process  of  converting  a  savage  into  a  civilized  people  is 
the  work  of  ages,  and  is  not  accomplished  in  the  brief  period 
here  implied. 

When  we  turn  our  attention  to  the  Vandals  we  find  that 
their  record  on  the  pages  of  history  is  somewhat  similar  to 
that  of  the  Goths.  Like  the  latter,  after  their  acquisition  of 
a  Roman  province,  the  conquest  of  which,  according  to  the 
annalists,  was  accompanied  by  the  most  extraordinary  atroci- 
ties and  economic  follies,  w^e  at  length  find  them  fleeing  be- 
fore the  armies  of  Belisarius,  their  cowardice  being  attributed 
to  the  sloth  and  eflfeminacy  contracted  during  the  period  of 
their  ascendency.  While  they  maintained  their  power  in 
Africa  we  are  told  the  Vandals  frequently  made  descents  on 
the  coasts  of  Spain,  Liguria,  Tuscany,  Campania,  Dalmatia, 
Epirus,  Greece  and  Sicily,  and  were  stigmatized  as  pirates 
for  so  doing,  but  the  appellation  seems  undeserved,  as  such 
manifestations  of  vigor  appear  to  have  been  common  in  an- 
cient times.  We  may  justly  suspect  that  all  the  Vandals 
were  not  thus  employed,  for  while  their  warriors,  with  "their 
arms  spread  desolation  and  terror  from  the  columns  of  Her- 

*Gibbon,  History  of  Rome,  Bohn,  Chap.  XXXI,  Vol.  Ill,  p.  468. 
flbid,  Chap.  LI,  Vol.  VI,  p.  89. 


LABOR  EFFICIENCY  259 

cules  to  the  mouth  of  the  Nile,"  it  seems  that  a  contingent 
remained  at  home  engaged  in  the  arts  of  peace,  developing 
and  making  the  best  of  the  resources  of  the  country  they 
had  occupied.  It  is  commonly  assumed  that  the  Vandals 
were  all  warriors,  but  this  must  be  an  error.  In  the  train 
of  their  victorious  armies  followed  the  usual  horde  of  non- 
combatants,  and  these  we  may  suppose  were  merged  with 
the  subject  population  and  assisted  them  in  the  product  of  the 
vast  wealth  which  characterized  the  rehabilitated  Carthage. 

Toward  the  middle  of  the  sixth  century  Procopius  vis- 
ited Africa  and  recorded  his  "admiration  of  the  populousness 
of  the  cities  and  country,  strenuously  exercised  in  the  labors 
of  commerce  and  agriculture."  When  Justinian's  great  Gen- 
eral, Belisarius,  reconquered  the  province  the  Vandalic  war- 
riors had  become  too  enervated  to  successfully  resist.  "In 
three  generations  prosperity  and  a  warm  climate,"  says  Gib- 
bon, "had  dissolved  the  hardy  virtue  of  the  Vandals,  who 
had  insensibly  become  the  most  luxurious  of  mankind.  In 
their  villas  and  gardens,  which  might  deserve  the  Persian 
name  of  Paradise,  they  enjoyed  a  cool  and  elegant  repose ; 
and  after  the  early  use  of  the  bath  the  barbarians  were  seated 
at  the  table  profusely  spread  with  the  delicacies  of  the  land 
and  sea.  Their  silken  robes,  loosely  flowing  after  the  fash- 
ion of  the  Medes,  were  embroidered  with  gold ;  love  and 
hunting  were  the  labors  of  their  life,  and  their  vacant  hours 
were  amused  by  pantomimes,  chariot  races  and  the  music 
and  dances  of  the  theater."* 

These  are  all  symptoms  of  an  advanced  civilization,  and 
although  our  authority  cites  them  to  show  the  declining  vir- 
tue of  the  Vandals,  they  may  be  more  properly  regarded  as 
indicative  of  the  love  of  peace  and  repose  which  all  prosper- 
ous industrial  peoples  experience.  It  would  be  an  error  to 
assume  that  the  undoubted  prosperity  of  the  conquerors  of 
Africa  was  solely  due  to  the  industry  of  the  subject  races, 

*Gibbon,  History  of  Rome,  Bohn,  Chap.  XLI,  Vol.  IV,  p.  372. 


26o         PROTECTION   AND  PROGRESS 

and  that  the  Vandal  occupants  of  the  soil  lived  in  idleness  at 
the  expense  of  their  conquered  subjects.  The  resources  of 
Africa  were  great,  but  they  were  not  abundant  enough  to 
maintain  in  sumptuousness  one  liundred  and  sixty  thousand 
idle  warriors,  the  number  to  which  the  original  fifty  thousand 
Vandalic  warriors  had  increased  during  the  three  generations 
succeeding  their  conquest. 

Had  not  the  arms  of  Belisarius  proved  victorious  a  difiFer- 
ent  tale  might  have  been  told,  and  the  word  "vandal"  would 
not  have  stood  as  a  synonym  of  savagery.  We  are  told  that 
after  their  defeat  "the  bravest  of  the  Vandal  youth  were  dis- 
tributed into  five  squadrons  of  cavalry  which  adopted  the 
name  of  their  benefactor  and  supported  in  the  Persian  wars 
the  glory  of  their  ancestors.  But  these  rare  exceptions,  the 
reward  of  birth  or  valor,  are  insufficient  to  explain  the  fate 
of  a  nation  whose  numbers  before  a  short  and  bloodless  war 
amounted  to  six  hundred  thousand  persons.  After  the  exile 
of  their  King  and  nobles,  the  servile  crowd  might  purchase 
their  safety  by  abjuring  their  character,  religion  and  lan- 
guage, and  their  degenerate  posterity  would  be  insensibly 
mingled  with  the  common  herd  of  African  subjects.  Yet 
even  in  the  present  age,  and  in  the  heart  of  the  Moorish 
tribes,  a  curious  traveler  has  discovered  the  white  complexion 
and  long  flaxen  hair  of  a  northern  race,  and  it  was  formerly 
believed  that  the  boldest  of  the  Vandals  fled  beyond  the 
power  or  even  the  knowledge  of  the  Romans,  to  enjoy  their 
solitary  freedom  on  the  shores  of  the  Atlantic  ocean."* 

The  conjecture  referred  to  may  have  had  some  founda- 
tion, but  it  seems  as  entirely  fanciful  as  was  the  attempt  of 
Gibbon  to  trace  in  the  people  of  modern  Lusatia  vestiges  of 
the  ancient  spirit  of  the  Vandals.  The  great  historian's 
theory  of  the  perpetuity  of  racial  qualities  is  contradicted  by 
the  experience  of  his  own  country,  which  shows  how  com- 
pletely the  original  propensities  of  peoples  may  be  eliminated 


♦Gibbon,  History  of  Rome,  Bohn,  Chap.  XLI,  Vol.  IV,  p.  388. 


LABOR  EFFICIENCY.  261 

by  assimilation,  and  that  a  general  type  is  evolved  whenever 
industry  and  commerce  have  moderately  free  play.  Such 
abnormalities  as  the  Basques  prove  nothing.  Even  they 
could  not  have  retained  their  characteristics  had  not  Spain 
been  so  weak  that  she  was  virtually  compelled  to  make 
treaties  with  them,  thus  practically  recognizing  their  inde- 
pendence.* This,  combined  with  their  isolation,  has  enabled 
them  to  maintain  their  ancient  usages.  Had  the  Basques 
been  subordinated  to  British  rule  they  would  have  been 
molded  into  Englishmen  as  effectually  as  the  Scotch,  who  are 
gradually  losing  their  distinguishing  characteristics. 

An  English  writer  has  remarked  "that  savages  did  not 
formerly  waste  away  before  the  classical  nations  as  they 
now  do  before  modern  civilized  nations.  Had  they  done  so," 
he  says,  "the  old  moralists  would  have  mused  over  the  event, 
but  there  is  no  lament  in  any  writer  of  that  period  over  the 
perishing  barbarians. "j-  This  observation  emphasizes  the 
fact  we  are  endeavoring  to  establish,  that  all  peoples  are 
capable  of  advancement,  and  that  if  they  turn  their  atten- 
tion to  industry,  unless  extirpated  by  war,  they  must  in  the 

fullness  of  time,  as  they  grow  in  numbers,  develop  a  civiliza- 
tion of  some  sort.  The  ancient  moralists  did  not  mourn  over 
the  disappearances  of  peoples  because  nothing  of  the  kind 
happened.  The  myths  of  the  ancients  and  their  more  serious 
writings  clearly  indicate  that  they  were  familiar  with  the 
process  of  amalgamation  and  that  they  had  more  than  an 
inkling  of  the  idea  of  industrial  evolution.  "I  am  of  opinion," 
says  Lucretius,  "that  the  world  is  of  comparatively  modern 
date  and  recent  in  its  origin  *  *  *  from  which  cause 
some  arts  are  but  now  being  refined,  and  are  even  at  the  pres- 
ent on  the  increase."!  And  in  another  place  he  says  :  "The 
earth  which  produced  all  creatures,  for  it  was  not,  as  T  con- 


♦Latimer,  Spain  in  the  Nineteenth   Century,  p.  202. 

fBogehat,    Physics   and    Politics,    Fortnightly    Review,    April,    1868, 

P-  455- 

'Lucretius,  Book  V  (v.  312-331). 


262         PROTECTION  AND  PROGRESS 

ceive,  a  golden  chain  from  above  that  let  down  the  tribes  of 
mortals  from  heaven  into  the  fields,  nor  did  the  sea  or  the 
waves  that  beat  the  rocks  produce  them ;  but  the  same  earth 
which  now  nourishes  them  from  their  own  substance  gen- 
erated them  at  first."*  People  capable  of  formulating  con- 
ceptions of  this  kind  might  easily  be  induced  to  act  upon  the 
principle  of  the  survival  of  the  fittest,  but  they  would  never 
make  the  blunder  of  assuming  that  the  number  of  peoples 
fitted  to  survive  was  limited,  and  that  only  those  who  were 
born  on  Latin  or  Greek  soil  could  reach  the  enlightened  stage. 
The  Roman  polity  was  a  flat  contradiction  of  such  an 
idea.  Whether  designedly  or  otherwise,  the  Romans  carried 
their  art  and  civilization  wherever  they  went,  and  in  con- 
quered territory  tolerated  all  the  arts  of  indigenous  growth. 
Theoretically  the  Roman  considered  his  countrymen  superior 
to  all  other  peoples,  but  in  practice  he  recognized  that  the 
ability  to  advance  was  not  confined  to  one  nation.  So,  too, 
the  Greeks.  They  emigrated  and  planted  colonies  wherever 
the  conditions  seemed  to  invite,  but  there  is  no  trace  whatever 
in  history  that  the  emigrants  or  colonists  imagined  that  they 
were  incapable  of  accomplishing  as  much  as  the  stock  from 
which  they  had  sprung.  The  Greeks  of  Syracuse  and  a  score 
of  other  places  along  the  coasts  of  Italy  and  Spain  were  to  all 
appearances  as  advanced  industrially  as  any  of  the  more 
ancient  Greek  settlements  in  Asia  Minor  or  on  the  Peninsula. 
It  never  entered  the  Grecian  mind  that  Greece  should  be  re- 
garded as  the  workshop  of  the  world  ;  on  the  contrary,  wher- 
ever he  planted  himself  the  Greek  began  to  develop  the  sur- 
rounding resources.  As  a  result  powerful  communities  grew 
up  which  soon  ceased  to  sympathize  with  the  political  aspira- 
tions of  those  left  behind  them.  The  transplanted  Greeks 
retained  the  feelings  inherited  from  their  forefathers,  but  the 
bonds  of  sympathy  were  weakened  by  industrialism,  and  in 
comparatively  brief  periods  they  ceased  to  be  Greeks  except 

*Lucretius,  Book  II  (v.  1155). 


LABOR  EFFICIENCY.  263 

in  language.  The  story  of  Syracuse,  with  a  modern  setting, 
would  not  differ  materially  from  that  of  the  United  States. 

These  are  facts  which  must  be  taken  into  consideration  if 
a  correct  efficiency  of  labor  theory  is  to  be  formulated.  It 
is  as  idle  for  modern  economists  to  assume  that  a  political 
boundary  determines  the  industrial  character  of  a  people  as 
it  would  have  been  for  the  ancients  to  look  upon  the  Syracus- 
ans  and  the  Massiliots  as  incapables  because  they  no  longer 
breathed  the  sacred  air  of  Greece.  If  the  Syracusans 
achieved  great  industrial  successes  in  their  new  home,  it 
was  not  because  they  were  born  on  the  island  of  Syracuse 
and  were  descended  from  Greeks,  but  rather  because  they 
had  the  wit  to  make  use  of  the  resources  of  the  country  in 
which  they  lived. 

Had  there  been  a  successful  Cobden  in  antiquity  the  great 
manufacturing  centers  on  the  Mediterranean  would  never 
have  been  established.  Colonies  would  have  been  planted, 
no  doubt,  but  the  colonists  would  have  depended  upon  the 
mother  country  for  their  supplies  of  manufactured  products, 
which  would  have  been  dealt  out  to  them  sparingly  and  on  the 
lines  suggested  by  Adam  Smith — that  is,  a  great  quantity  of 
the  rude  products  of  the  soil  would  have  been  taken  in  ex- 
change for  a  very  small  quantity  of  finished  articles.  Had 
there  been  any  marked  tendency  of  this  kind  in  antiquity  the 
whole  course  of  history  would  have  been  changed.  Had  the 
Greeks  in  Syracuse  contented  themselves  with  producing 
those  agricultural  commodities  for  which  their  island  was 
celebrated  a  great  and  wealthy  city,  which  dared  to  contest 
with  the  mother  country  for  supremacy,  would  not  have 
grown  up.  Had  the  Phoenician  colonists  planted  at  Carthage 
respected  the  desires,  of  the  Tyrians  and  simply  devoted 
themselves  to  developing  the  agricultural  resources  of 
northern  Africa,  Tyre  might  still  be  in  existence.  Or  per- 
haps, to  carry  the  idea  still  further  back,  had  the  Tyrians 
devoted  themselves  to  water  carriage  instead  of  turning  their 
attention  to  purple  dyes  and  manufacturing,  the  port  might 


264         PROTECTION   AND   PROGRESS 

have  filled  a  smaller  place  in  the  annals  of  mankind,  for  its 
maritime  inhabitants,  if  they  had  kept  strictly  to  their  natural 
vocation,  would  have  obtained  their  supplies  of  finished 
articles  from  still  older  civilizations,  whose  economists  might 
have  urged  that  it  would  be  more  profitable  for  Tyre  to 
stick  to  the  carrying  trade  and  leave  to  the  countries  with 
established  manufactures  the  work  of  supplying  sailors  and 
agriculturalists  with  their  products. 

Fortunately  for  the  world,  the  Cobdenistic  idea  of  the 
efficiency  of  labor  never  prevailed.  Mankind  has  always 
refused  to  accept  the  doctrine  of  racial  inferiority.  Even 
the  savage  who  wages  unrelenting  war  against  his  neighbors 
is  inspired  by  a  better  principle  than  that  underlying  the 
free  trade  theory  that  some  peoples  are  destined  by  Provi- 
dence to  play  an  inferior  role.  The  bloody  Sioux  who 
triumphs  by  adding  to  the  number  of  scalp  locks  in  his 
possession  is  animated  by  the  feeling  that  he  would  be  de- 
graded if  he  did  not  show  himself  superior,  or  at  least 
equal,  in  prowess  to  his  rivals.  The  scalp  lock  is  the  Sioux's 
symbol  for  power  and  greatness.  The  progress  made  in 
the  industrial  arts  are  the  signs  by  which  we  recognize  a 
nation's  advance,  and  while  the  feeling  may  remain  dormant 
in  the  breasts  of  some  peoples  for  a  time,  it  is  sure  to  be 
awakened  at  last.  A  little  over  a  century  ago  the  historian 
Gibbon  sweepingly  characterized  the  Russians  as  a  race 
of  barbarians  with  little  prospect  of  emerging  from  their 
inferior  condition  (169).  Today  the  people  he  so  scornfully 
alluded  to  are  members  of  a  mighty  empire,  steadily  accom- 
plishing the  work  of  developing  a  territory  of  unrivaled  re- 
sources, and  incidentally  exerting  a  greater  civilizing  influ- 
ence than  any  other  nation  in  ancient  or  modern  times. 

If  we  patiently  read  the  pages  of  history  and  sensibly 
interpret  them  we  shall  be  forced  to  conclude  that  no  people 
has  a  monopoly  of  skill,  and  that  no  nation  is  destined  by 
nature  to  be  the  world's  workshop.  Our  investigations  may 
disclose  that  some  nations  enjoy  advantages  over  others,  but 


LABOR  EFFICIENCY.  265 

they  are  not  of  the  kind  which  the  Cobdenites  would  have 
us  beheve  exist.  No  doubt  some  countries  wall  always  be 
found  producing  more  cheaply  than  others,  but  the  ability 
to  do  so  will  be  an  acquired  and  not  a  natural  one.  We  have 
operatives  in  our  factories  who  attend  more  cotton  looms 
than  their  fellows  abroad,  but  they  are  not  all  Americans ; 
sometimes  these  operatives  are  mere  sojourners  in  our 
midst.  According  to  a  recent  official  publication  there  were 
15,823  persons  of  foreign  birth  out  of  a  total  of  22,398  who 
found  work  in  the  Fall  River,  Mass.,  mills  in  1895,  and  in 
the  same  year  7,047  persons  of  foreign  birth  found  employ- 
ment in  the  mills  of  New  Bedford,  while  only  1,183  natives 
were  employed.  In  the  Fall  River  mills  there  were  6,056 
French  Canadians  and  6,073  English ;  only  6,575  o"t  of 
22,398  employed  in  this  great  American  manufacturing  cen- 
ter were  born  on  our  soil. 

Under  the  circumstances,  it  is  folly  to  assume  that  any 
superiority  displayed  in  American  mills  is  due  to  the  nativity 
of  the  operatives.  If  the  cotton  mills  of  the  United  States 
are  operated  at  a  smaller  labor  cost  than  those  of  Europe 
some  other  explanation  of  the  fact  exists.  Better  manage- 
ment ;  more  efficient  plants ;  higher  wages,  may  account  for 
such  a  result,  but  not  the  superior  skill  of  the  American  peo- 
ple. It  is  idle  to  claim  that  such  is  the  case  when  the  fact 
is  apparent  that  our  factories  are  filled  with  operatives  of  all 
nationalities,  who,  so  far  as  our  information  goes,  acquit 
themselves  well  or  ill,  not  because  they  are  Americans,  or 
French,  or  English,  but  because  of  some  individual  superior- 
ity or  defect.  If  it  could  be  shown  from  a  payroll  of  a  Fall 
River  cotton  mill  that  the  average  American-born  operative 
attended  more  machines  than  the  average  foreigner  who 
works  by  his  side  the  efficiency  of  labor  theory  which  as- 
sumes race  superiority  would  command  respect.  But  in  the 
absence  of  such  testimony  sensible  men  will  conclude  that, 
all  other  things  being  equal,  the  natives  of  one  country  will 
work  as  efficiently  as  those  of  another. 


CHAPTER  XIII. 
LABOR-SAVING  DEVICES. 

EFFECTS  OF  THE  USE  OF   IMPROVED   MACHINERY   ON    MODERN 

SOCIETY. 

Schoenhoflf's  explanation  of  lower  labor  cost  in  America — The  cot- 
ton spinning  industry  in  the  United  States — Wages  reduced  in 
Massachusetts  to  withstand  the  encroachments  of  the  Southern 
factories — A  rapid  equalization  of  artificial  advantages — Changes 
in  centers  of  distribution — The  movement  of  the  center  of  indus- 
try steadily  westward — Effects  of  the  use  of  labor-saving  ma- 
chinery— The  nail-making  industry  in  England — Why  labor- 
saving  machines  are  slowly  introduced  in  Great  Britain — Con- 
stant increase  of  the  social  wreckage — Attitude  of  British  trades 
unions  on  the  subject  of  labor-saving  devices — British  opposi- 
tion to  the  use  of  automatic  machinery — The  free  use  of  auto- 
matic machinery  in  the  United  States — The  workingman's  share 
of  the  gain  to  society  from  the  use  of  labor-saving  machinery 
is  infinitesimal — Production  increased  twenty-fold  by  machines 
and  wages  scarcely  doubled — No  hope  of  better  wages  held  out 
for  increased  exertions. 

Although  there  is  no  fotindation  for  the  belief  that  the 
natural  abilities  of  only  a  few  peoples  make  it  possible  for 
them  to  develop  a  high  degree  of  mechanical  skill,  it  is  un- 
doubtedly true  that  a  great  difference  in  the  cost  of  labor  is 
met  with  in  different  countries.  There  seems  also  to  be 
abundant  evidence  that  this  labor  cost  may  be  lower  in  coun- 
tries where  wages  are  nominally  high  than  in  rival  countries 
where  the  compensation  of  the  workingman  is  much  smaller. 
The  observation  of  this  fact  has  lent  color  to  the  assumption 
that  some  races  are  better  fitted  by  nature  to  engage  in  man- 
ufacturing than  others.    When  it  can  be  demonstrated  that 

266 


LABOR-SAVING    DEVICES.  267 

one  hundred  operatives  in  an  English  cotton  mill  turn  out 
twice  as  many  yards  of  cloth  as  a  similar  number  of  opera- 
tives in  a  German  establishment  the  inference  seems  reason- 
able that  the  better  results  attained  in  England  are  due  to 
the  superior  skill  of  the  people  employed  in  the  British  mills. 

It  is  possible,  however,  that  the  better  results  achieved 
are  not  due  to  the  employment  of  more  skillful  people  in 
England  than  on  the  continent.  Too  many  of  the  writers 
who  have  discussed  this  subject  have  ignored  the  disposition 
which  manifests  itself  in  some  countries  to  prevent  working- 
men  exerting  their  full  powers.  Some  of  them  have  recog- 
nized this  factor,  but  in  a  manner  calculated  to  minimize  its 
importance.  Jacob  Schoenhoff ,  who  has  devoted  much  atten- 
tion to  the  subject  of  labor  efficiency,  in  a  review  article  tells 
us  that  "the  improved  and  high  speed  machinery  in  America 
requires  a  class  of  workmen  superior  to  that  employed  in 
low-wage  countries.  That  the  superior  results  which  show 
themselves  so  prominently  in  the  exporting  of  the  products 
of  our  mills  require  great  exertion,"  he  says,  "is  self-evident. 
That  this  can  be  maintained  only  by  a  correspondingly  high 
standard  of  living  on  the  part  of  the  worker — i.  e.,  high 
wages — is  equally  self-evident.  The  higher  wages  which  our 
workmen  receive,  however,  do  not  materially  aflfect  the  price 
of  our  goods  in  industrial  competition ;  for  adverse  condi- 
tions are  more  than  equalized  by  our  greater  output."* 

The  ink  used  in  printing  the  article  by  Schoenhoff  had 
scarcely  dried  before  a  bulletin  was  issued  from  the  press  of 
the  Statistical  Bureau  of  the  Commonwealth  of  Massachu- 
setts devoted  to  the  discussion  of  the  subject  of  the  cotton 
manufacturing  industry  of  the  Bay  State,  a  large  part  of 
which  was  surrendered  to  an  inquiry  into  the  efifects  of  the 
competition  of  the  cheaper  labor  employed  in  Georgia  and 
other  Southern  States.  The  conclusions  of  the  compiler  of 
the  document  are  interesting  and  seem  to  effectually  dispose 

♦Schoenhoff,  Exports  and  Wages,  Forum,  January,  1898. 


268         PROTECTION   AND   PROGRESS 

of  Mr.  Schoenhoff's  theory  that  high  wages  arc  not  a  dis- 
advantage in  a  competition  with  producers  who  pay  lower 
wages. 

The  writer  says :  "That  there  are  certain  advantages 
wliich  the  mills  in  Massachusetts  and  in  the  South  respec- 
tively enjoy,  as  against  each  other,  is  plain.  The  principal 
advantage  in  the  South  lies  in  long  hours  and  low  wages. 
Just  how  much  of  an  advantage  this  is,  upon  the  whole,  is 
an  open  question,  or,  at  least,  a  question  about  which  there 
is  much  difference  of  opinion.  The  disparity  in  nominal 
wages  is  already  shown  by  the  figures  herein  presented  (in 
the  bulletin),  and  probably  amounts,  to  put  it  in  a  general 
statement,  to  at  least  30  per  cent,  in  favor  of  the  South.  But 
nominal  wages  from  the  manufacturer's  standpoint  do  not 
show  labor  cost,  and  as  far  as  the  industry  as  a  whole  is 
concerned  the  labor  cost  when  computed  per  spindle  does 
not  show  nearly  so  wide  a  variation ;  while  if  the  total  cost 
of  labor  and  stock  be  computed  as  a  percentage  upon  the 
output  the  differences  between  the  States  are  still  less.  This 
statement  is  based,  of  course,  upon  the  only  existing  official 
figures  and  applies  to  the  industry  as  a  zvhole  and  not  to  par- 
ticular mills,  or  particular  kinds  of  goods. 

"Nor  from  the  standpoint  of  the  operatives  do  nominal 
wages  or  money  earnings  show  what  is  actually  obtained. 
This  depends  upon  the  cost  of  living,  which,  under  present 
standards,  is  probably  less  in  the  South,  taking  everything 
into  consideration,  than  in  Massachusetts.  Taxes  are  lower 
in  the  South,  but  interest  charges  are  higher.  There  appears 
to  be  a  slight  advantage  in  cost  of  power  in  some  of  the 
Southern  States,  due  partly  to  the  greater  use  of  water 
power,  but  so  far  as  shown  by  the  figures  obtainable  by  us, 
when  the  aggregate  cost  of  fuel  is  computed  as  a  percentage 
upon  output  for  the  industry,  the  advantage  seems  to  be  very 
slight.  The  proximity  of  the  Southern  mills  to  the  cotton 
fields  is  largely  offset  by  higher  freight  rates  and  other  fac- 
tors, so  that  no  difference  is  to  be  seen  in  the  price  of  cotton 


LABOR-SAVING    DEVICES.  269 

at  the  mill,  while  the  Southern  mills  are  at  a  greater  distance 
from  the  centers  of  distribution  of  the  product,  and  they  are 
also  further  away  from  the  sources  where  machinery  and 
supplies  must  be  obtained."* 

This  long  excerpt  might  have  been  dispensed  with,  as 
Mr.  Schoenhoff 's  contention  could  have  been  disposed  of  by 
simply  stating  the  fact  that  the  Massachusetts  mills  in  the 
early  part  of  1898  were  compelled  to  make  a  reduction  of 
wages  to  meet  the  cheaper  labor  of  the  South,  but  the  views 
of  the  writer  of  the  bulletin  are  presented  because  they  in- 
telligently discuss  the  fallacies  underlying  the  efficiency  of 
labor  theory.  For  nearly  the  same  reason  it  is  expedient  to 
reproduce  the  comments  of  the  Boston  Textile  World,  which, 
in  December,  1897,  predicted  that  employers  would  be  com- 
pelled to  resort  to  such  a  course,  saying :  "One  of  two  things 
will  have  to  be  done  :  either  the  hours  of  labor  in  Massachu- 
setts will  have  to  be  extended  or  the  wages  of  operatives  will 
have  to  be  reduced.  The  latter  is  the  more  likely.  Southern 
competition  with  Massachusetts  mills  is  more  detrimental 
than  any  foreign  competition  on  the  lower  grade  of  goods." 
A  keen  Southern  critic,  noting  the  admission  in  this  con- 
cluding sentence,  remarked  :  "This  observation  is  significant, 
and  while  it  applies  to  competition  only  on  lower  grades  of 
goods,  it  nevertheless  shows  that  what  is  true  of  these  grades 
may  in  time  become  true  of  other  grades. "f 

When  we  attempt  to  analyze  the  conclusions  reached  by 
the  compiler  of  the  Massachusetts  Labor  Bulletin  we  find 
admissions  which  fully  justify  the  claim  of  the  Southerners 
that  they  are  deriving  an  advantage  from  the  presence  of 
large  bodies  of  negroes  willing  to  work  more  cheaply  than 
the  operatives  in  the  cotton  mills  of  New  England.  The 
bulletin  states  that  while  the  difference  is  not  as  great  as 
the  lower  nominal  wages  of  the  South  imply,  there  is  still 


*Labor  Bulletin  of  Massachusetts,  No.  5.  January,   if 
f  Atlanta  Constitution,  December,   1897. 


270         PROTECTION   AND  PROGRESS 

a  difference  in  favor  of  the  latter  section.  But  the  writer 
or  compiler  virtually  admits  that  his  comparison  is  not 
wholly  trustworthy  by  calling  attention  to  the  fact  that  his 
statement  applies  to  the  cotton  "industry  as  a  whole  and  not 
to  particular  mills  or  particular  kinds  of  goods."  Had  he 
confined  his  comparison  of  the  progress  made  in  the  two 
sections  to  the  lower  grades  of  goods  he  would  not  have  con- 
veyed the  impression  which  he  to  a  certain  extent  does  that 
Massachusetts  has  nothing  to  fear  from  Southern  competi- 
tion. 

A  table  presented  by  the  Atlanta  Constitution,  which 
shows  that  the  number  of  mills  in  the  South  had  increased 
from  254  in  1890  to  483  in  1897,  and  the  spindles  during 
the  same  period  from  1,712,930  to  4,105,667,  indicates  the 
state  of  affairs  more  truly  than  the  figures  of  the  Massachu- 
setts bulletin,  which  really  have  no  immediate  bearing  on 
the  matter.  It  is  easily  conceivable  that  the  cotton  manu- 
facturing industry  as  a  whole  may  continue  to  expand  in 
Massachusetts  in  the  face  of  Southern  rivalry,  but  the  causes 
for  such  expansion  when  inquired  into  closely  will  be  found 
to  be  different  from  those  assumed  by  the  advocates  of  the 
labor  efficiency  theory. 

The  Massachusetts  Labor  Bulletin  hints  at  some  of  the 
reasons  why  the  cotton  manufacturing  industry  in  New  Eng- 
land may  continue  for  some  time  to  come  to  pay  higher 
wages  than  are  paid  in  the  South.  It  states  that  while  taxes 
are  lower  in  the  South  interest  charges  are  higher.  This 
latter  condition  is  not  likely  to  exist  very  long.  If  the  South- 
ern factories  make  as  much  progress  in  the  coming  seven 
years  as  they  have  in  the  past  capital  will  flow  to  that  section 
in  abundance ;  perhaps  some  of  that  now  employed  in  Massa- 
chusetts will  be  diverted  to  the  newer  and  more  profitable 
field.  And  the  higher  freight  rates  which  the  Southern  fac- 
tories are  now  compelled  to  pay  in  order  to  bring  their  sup- 
plies of  raw  material  from  the  comparatively  near-at-hand 


LABOR-SAVING    DEVICES.  271 

cotton  fields  will  be  reduced  in  the  near  future,  thus  remov- 
ing another  of  the  new  competitor's  disadvantages. 

One  of  the  noteworthy  features  of  recent  railroad  build- 
ing in  this  country  is  that  a  large  part  of  the  newly  projected 
lines  and  extensions  are  in  the  South.  This  means  increased 
facilities  and  competition  which  may  be  relied  upon  to  lower 
freight  rates  between  field  and  factory  in  that  section,  and 
the  result  will  be  a  decided  advantage  to  the  Southern  mills, 
making  their  proximity  to  cotton  supplies  a  telling  factor 
in  cost  of  production.  That  the  present  advantage  of  being 
near  to  the  centers  of  distribution,  which  the  bulletin  says 
the  Massachusetts  mills  now  enjoy,  will  soon  disappear  must 
be  evident  to  any  one  who  will  take  the  trouble  to  note  that 
the  center  of  population  in  this  country  is  steadily  moving 
westward.  In  1790  Baltimore  occupied  the  position;  a  cen- 
tury later  it  was  at  a  point  about  thirty  miles  west  of  Cin- 
cinnati.* At  the  same  rate  of  progression,  Atlanta,  the 
principal  seat  of  the  cotton  industry  in  Georgia,  will  in  less 
than  fifty  years  be  more  accessible  to  a  greater  number  of 
people  than  the  mills  of  New  England  are  at  present. 

Concurrently  with  this  increase  of  population  and  shift- 
ing of  the  center,  there  will  go  on  a  development  of  the 
general  manufacturing  industry  of  the  country  which  will 
bring  the  South  fully  as  near  to  "the  sources  from  whence 
machinery  and  supplies"  must  be  obtained  as  Massachusetts. 
Indeed,  there  is  no  reason  why  the  South  itself  should  not 
be  one  of  the  sources  of  supply.  No  one  thus  far  has  been 
able  to  show  that  a  general  manufacturing  industry  may  not 
spring  up  in  the  vicinity  of  the  great  iron  deposits  of  Ala- 
bama. On  the  contrary,  it  is  now  very  generally  maintained 
that  such  will  be  the  case.  In  any  event,  the  great  develop- 
ment of  manufactures  in  the  tier  of  Western  States  imme- 
diately north  of  the  region  where  the  cotton  manufacturing 
and  cotton  planting  industry  of  the  South  is  most  flourishing 

♦Gannett,  The  Building  of  a  Nation,  p.  73. 


272         PROTECTION   AND   PROGRESS 

promises  lo  give  the  Atlanta  and  other  Southern  factories  as 
cheap  a  hase  of  suppHes  as  that  now  enjoyed  by  New  Eng- 
land. 

We  are  so  apt  to  think  of  the  people  of  the  central  region 
of  the  Union  as  great  agricultural  producers  that  we  quite 
overlook  the  phenomenal  manufacturing  development  of 
their  section.  "In  1850  the  Prairie  States  had  only  one 
factory  operative  to  seven  farming  hands,  where  in  1890  the 
figures  stood  relatively  as  five  to  eleven.  In  1850  the  number 
of  operatives  in  factories  was  111,000;  in  1890  it  was  1,407,- 
000.  The  value  of  manufactured  products  in  the  latter  year 
was  $3,161,000,000,  of  which  $2,259,000,000  was  of  sundries, 
less  than  one-third  of  the  total  being  flour,  meat  and  lum- 
ber." The  authority  furnishing  these  figures  says  that  "food 
and  lumber  constitute  the  principal  manufactures,"  but  bis 
own  tables  convict  him  nf  a  blunder.  The  m.anufacturing 
industry  of  Illinois,  Indiana,  Ohio  and  other  Western  States 
is  becoming  as  thoroughly  diversified  as  that  of  New  Eng- 
land. On  this  point  the  chief  of  the  Bureau  of  Statistics  of 
the  United  States  says :  "Following  upon  the  rapid  advance 
in  the  population  of  the  Western  States,  large  and  diversified 
manufacturing  enterprises  have  been  established,  and  the 
center  of  the  manufacturing  industries  of  the  country  has 
moved  slowly  toward  the  West.  In  1890  the  center  was 
about  eight  and  one-half  miles  south  of  Canton,  Ohio,  while 
in  1850  it  was  near  Mifflintown,  Pa."* 

In  the  face  of  evidence  such  as  this  it  will  be  very  diffi- 
cult for  Mr.  Schoenhoff,  and  those  who  agree  with  him,  to 
maintain  their  contention  that  the  greater  efficiency  of  the 
labor  of  New  England  will  make  that  section  the  permanent 
seat  of  the  cotton  maimfncliu-ing  industry  of  the  Union. 
We  have  seen  that  while  the  manufacturers  of  New  England 
have  been  compelled  to  reduce  the  wages  of  their  operatives 
in  order  to  meet  the  lower  wages  paid  by  the  Southern  man- 


*Mulhall,  Progress  of  the  United  States,  .North  American  Review, 
August,    1897. 


LABOR-SAVING    DEVICES.  273 

ufacturer,  they  still  possess  advantages  which  should  ma- 
terially help  them  in  a  competitive  contest,  but,  as  has  been 
pointed  out,  they  are  of  a  temporary  character  and  cannot 
long  be  monopolized.  Interest  will  be  lowered  in  the  South, 
freight  rates  will  be  reduced,  thus  equalizing  the  cost  of  dis- 
tribution, which  is  now  against  the  latter  section,  and  sup- 
plies of  machinery  and  other  things  will  be  as  easily  and  as 
cheaply  obtained  by  the  Southerners  as  by  the  manufac- 
turers of  New  England. 

No  fancied  superiqrity  of  labor  will  avail  to  avert  the 
inevitable  result  of  the  creation  of  a  great  cotton  industry 
in  the  South.  It  will  be  impossible  for  the  New  Englanders 
to  permanently  retain  the  advantages  derived  from  their 
high  organization  which  effects  savings  as  yet  unpracticed  by 
the  new  competitors.  These  advantages,  however,  will  all 
be  acquired  in  time  by  the  Southerners,  whose  experience 
will  ultimately  demonstrate  that  "superior  labor  efficiency" 
is  a  broken  reed  to  lean  upon.  Whether  the  natural  ad- 
vantages of  proximity  to  the  cotton  fields  and  to  the  great 
mass  of  the  consuming  population  of  the  United  States  will 
ultimately  entirely  overcome  the  present  artificial  advantages 
enjoyed  by  New  England  is  something  for  the  future  to  de- 
cide. It  is  not  improbable  that  Massachusetts,  whose  eco- 
nomic writers  now  tell  us  of  the  superior  efficiency  of  the 
labor  employed  in  the  cotton  factories  of  that  State,  may 
be  compelled  to  resort  to  the  purely  artificial  device  of 
lowering  wages  until  the  cost  of  production  is  reduced  suffi- 
ciently to  offset  the  benefits  which  the  Southern  mills  enjoy 
in  the  shape  of  lower  price  of  raw  material  and  cheap  labor. 

It  must  not  be  inferred  from  this  presentation  of  facts 
that  the  writer  has  lost  sight  of  the  tendency  of  wages  to 
increase  in  those  countries  where  manufacturing  industries 
secure  a  foothold.  The  accuracy  of  an  observation  made  by 
David  F.  Schloss,  who  advances  the  argument  that  "dear 
labor  is  cheap,"  is  admitted.  He  tells  us  that  "in  Germany 
wages  are  every  day  higher ;  and  with  the  increase  in  its 

18 


274         PROTECTION  AND   PROGRESS 

remuneration  the  productivity  of  German  labor  is  by  slow  but 
steady  steps  concurrently  advancing."  He  also  says  that 
"even  the  wide  gulf  which  separates  the  English  from  the 
Indian  cotton  spinner  is  being  rapidly  narrowed.  Not  long 
ago  it  was  shown  that  it  took  six  of  the  Bombay  native  mill 
hands  to  do  as  much  work  as  one  Lancashire  operative.  But 
within  the  last  few  years  the  remuneration  of  the  Indian 
operative  has  risen  from  30  to  40  per  cent.,  while  his  indus- 
trial efficiency  has  nearly  doubled  itself."*  The  truth  of 
these  statements  can  no  doubt  be  easily  substantiated,  but  we 
question  whether  Mr.  Schloss'  deduction  from  them  is  sound. 
He  says :  "Under  these  circumstances,  it  must  be  clear  that 
the  true  line  of  deliverance  for  our  English  industries,  hard 
pressed  as  these  industries  unquestionably  are  by  foreign 
competition,  is  to  be  found  in  the  augmentation  rather  than 
the  diminution  of  the  wages  of  English  labor." 

No  one  will  contend  for  a  moment  that  a  diminution  of 
the  wages  of  the  English  operative  may  result  injuriously  to 
the  worker  by  lessening  his  productive  ability,  but  it  must  not 
be  forgotten  that  there  is  a  surplus  of  workers  and  that  in  the 
present  crude  state  of  distribution  the  ability  to  produce  in 
excess  of  the  effective  demand  plays  an  important  part.  Let 
us  take  an  instance  cited  by  Mr.  Schloss  and  study  it  care- 
fully in  order  to  ascertain  its  real  significance.  The  evidence 
taken  by  the  British  sweating  committee  in  1889,  he  tells  us, 
''showed  that  a  man  and  his  wife  can  only  earn  between 
them  from  10  shillings  to  17  shillings  in  a  busy  week  at  nail 
making  in  the  Midlands,  The  average  is  much  less,  for  in 
some  weeks  they  get  no  work  at  all.  Much  of  the  work 
is  done  in  wretched  hovels,  often  under  most  unsanitary 
conditions,  and  many  of  the  women  injure  themselves  in  a 
grave  manner  by  the  use  of  the  heavy  'oliver'  employed  in 
cutting  the  cold  iron — a  clumsy  spring-tilt  hammer — trying 
the  strength  of  the  worker  to  the  utmost  extent.  But  in 
America,  as  Mr.  Schoenhofif  proves,  the  manufacturers,  avail- 


*Wright,  Industrial  Evolution  of  the  United  States,  p.  161. 


LABOR-SAVING    DEVICES.  275 

ing  themselves  of  the  best  metliods  and  the  most  improved 
machinery,  are  able  to  turn  out  nails  at  one-half  the  labor 
cost  incurred  in  England,  and  that  although  the  American 
workman  receives  wages  fully  ten  times  as  high  as  those  of 
our  Dudley  nail  makers."* 

It  is  not  necessary  to  raise  the  question  here  whether  the 
improved  nail-making  machinery  in  use  in  the  United  States 
is  a  blessing  or  the  reverse.  Doubtless  its  employment  has 
cheapened  the  cost  of  production  and  lowered  the  price  of 
nails,  thus  stimulating  consumption ;  and,  as  the  writer  ob- 
serves, the  American  nail  maker  receives  wages  fully  ten 
times  as  high  as  those  paid  to  the  English  nail  makers.  This 
we  know  is  the  case,  but  it  may  be  asked  whether  the  substi- 
tution by  the  British  of  the  improved  processes  in  vogue  in 
this  country  for  those  now  pursued  in  England  would  be 
followed  by  a  similar  result.  In  other  words,  if  the  Mid- 
lands nail  makers  were  supplanted  by  machines  would  those 
who  attend  the  machines  receive  ten  times  as  much  wages 
as  English  nail  makers  now  receive?  Obviously  not.  The 
reason  why  is  clear.  Contrary  to  the  opinion  of  the  Schoen- 
hoff  school,  which  assumes  that  the  ability  to  skillfully  ma- 
nipulate machinery  is  confined  to  a  few  peoples  and  is 
acquired  slowly  and  with  great  difficulty,  the  reverse  is  the 
case.  We  have  only  to  bring  to  mind  the  fact  that  modern 
processes  of  manufacture  are  little  more  than  a  century  old 
to  understand  with  what  facility  civilized  people  acquire  a 
knowledge  of  the  industrial  arts.  The  nail  makers  of  the 
English  midland  counties  may  seem  dull,  but  there  is  no 
doubt  whatever  that  the  ability  which  they  have  displayed  in 
fashioning  nails  by  hand  could  be  developed  along  other 
lines,  and  that  the  brightest  of  them  could  speedily  learn  to 
attend  nail  making  machines  with  as  much  success  as  the 
most  expert  American  nail  makers. 

But  before  asking  what  the  result  of  the  abandonment  of 

*Schloss,  Dearness  of  Cheap  Labor,  Fortnightly,  January,  1893. 


276         PROTECTION  AND  PROGRESS 

nail  making  by  hand  would  be  we  ought  to  inquire  why  the 
English  method  has  prevailed  so  long  in  the  face  of  Ameri- 
can experience.  The  success  of  the  improved  American 
nail  making  machinery  has  not  been  a  secret  to  Englishmen. 
They  knew  that  a  single  workingman  in  the  United  States 
could  turn  out  an  immensely  greater  quantity  of  nails  with 
the  aid  of  a  machine  than  could  a  score  of  British  workers 
following  the  old  method.  Why,  then,  has  nail  making  by 
machinery  not  been  generally  adopted  in  Great  Britain? 
The  only  answer  that  suggests  itself  is  that  capital  fears  that 
a  resort  to  it  may  bring  about  something  like  a  revolution. 
The  use  of  labor-saving  machinery  is  creating  for  itself  in 
England  an  industrial  imposse.  Successive  inventions  have 
narrowed  the  field  of  employment  in  that  country,  relatively 
if  not  absolutely.  The  result  is  that  there  is  now  in  England 
an  enormous  population  which  causes  concern  to  statesmen, 
to  economists  and  to  intelligent  workingmen,  who  are  trying 
to  avert  the  evil  consequences  of  undue  stimulus  by  a  resort 
to  tactics  which  destroy  the  bond  of  union  between  employer 
and  employed,  and  make  them,  despite  all  the  pretense  to 
the  contrary,  as  much  enemies  to  each  other  as  though  they 
were  inhabitants  of  different  and  hostile  countries. 

Sir  Robert  Giffen,  who  has  always  made  it  a  point  to 
treat  the  difficulties  of  the  modern  industrial  system  opti- 
mistically, writing  on  the  subject  of  the  "Gross  and  Net  Gain 
of  Rising  Wages,"  expresses  the  belief  that  "the  whole  struc- 
ture of  modern  society  is  such  as  to  require  greater  and 
greater  knowledge,  greater  and  greater  energy  and  moral 
power,  greater  and  greater  capacity  of  every  kind,  so  as  to 
make  sure  that  machines  and  inventions  are  maintained  and 
improved,  and  that  artistic  capacities  and  the  arts  of  living 
are  developed  to  correspond."  And  he  declares  that  this 
"continuous  improvement  implies  a  continuous  improvement 
on  the  average  of  the  human  being  who  really  belongs  to  the 
new  society."* 


*Schloss,  Dearness  of  Cheap  Labor,  Fortnightly,  January,  1893. 


LABOR-SAVING    DEVICES.  2^] 

While  Sir  Robert  has  no  doubt  that  the  demand  for  con- 
tinuous improvement  will  be  met,  and  that  the  quality  of 
such  workingmen  as  are  needed  to  attend  the  rapidly  increas- 
ing number  of  labor-saving  machines  will  keep  up  to  the 
requirements  of  inventive  ingenuity,  he  cannot  escape  the 
conclusion  that  the  effect  will  be  to  create  two  societies. 
"The  one  doubtful  sign,  it  appears  to  me,"  he  says,  "as  re- 
gards the  future,  is  pointed  at  by  the  qualification  implied  in 
the  words,  the  human  being  who  really  belongs  to  the  new 
society.  It  may  possibly  happen  that  there  will  be  an  in- 
crease, or  at  least  a  non-diminution,  of  what  may  be  called 
the  social  wreckage.  A  class  may  continue  to  exist  and  even 
increase  in  the  midst  of  our  civilization,  possibly  not  a  large 
class  in  proportion,  but  still  a  considerable  class,  who  are 
out  of  the  improvement  altogether,  who  are  capable  of  noth- 
ing but  the  rudest  labor,  and  who  have  neither  the  mental 
or  the  moral  qualities  fitted  for  the  strain  of  the  work  of 
modern  society."* 

This  was  written  in  1889,  and  it  shows  clearly  that  Sir 
Robert  Giffen,  in  common  with  other  English  economists 
and  some  Americans  of  their  way  of  thinking,  underrate  a 
growing  evil,  but  what  is  more  pertinent  to  this  discussion, 
they  overlook  the  fact  that  the  benefits  which  workingmen 
in  the  existing  condition  of  affairs  derive  from  the  invention 
of  labor-saving  machinery  are  necessarily  of  a  transitory 
character.  There  is  no  doubt  that  for  a  period  after  the 
introduction  of  machinery  which  greatly  reduces  the  labor 
involved  in  the  production  of  a  certain  article  the  wages  of 
those  employed  in  the  manipulation  of  the  machines  will  be 
much  higher  than  those  received  by  the  hand  workers  for- 
merly engaged  in  the.  production  of  the  same  article.  But 
v/hen  the  number  of  people  .capable  of  working  the  machines 
is  multiplied,  and  the  social  wreckage  referred  to  by  Sir 
Robert  Giffen  is  increased,  wages  will  diminish. 

♦Giffen,  Gross  and  Net  Gain  of  Rising  Wages,  Contemporary,  De- 
cember,   1889. 


278         PROTECTION  AND  PROGRESS 

Recurring  to  the  illustration  of  nail  making  machinery, 
can  any  one  doubt  that  the  effects  of  the  substitution  of 
machine  for  hand  work  in  their  manufacture  in  England  will 
add  to  the  social  wreckage  of  that  country?  The  cost  of 
the  production  of  nails  may  be  reduced  to  a  figure  which 
will  enable  the  British  to  successfully  compete  with  the  well 
established  nail  making  industry  of  the  United  States,  and 
the  wages  of  the  men  who  run  the  machines  will  for  a  time 
be  higher.  But  unless  the  English  people  make  up  their 
minds  to  support  the  whole  of  the  social  wreckage  of  the 
nation  at  the  public  expense,  a  steady  if  undirected  pressure 
will  be  exerted  which  ultimately  will  bring  down  the  wages 
of  the  machine  worker  to  a  lower  level  than  that  which 
marked  the  employment  of  hand  workers. 

This  being  the  case,  it  must  be  admitted  that  the  sug- 
gested remedy  might  prove  worse  than  the  malady.  The 
comparatively  few  workers  retained  would  for  a  time  enjoy 
increased  wages,  but  the  majority  would  become  social 
wrecks.  Schloss,  commenting  upon  the  answer  of  certain 
"sweaters"  to  the  Royal  Commission  appointed  by  the  Brit- 
ish Government  to  examine  into  the  affairs  of  the  sweated 
industries,  expresses  a  contrary  view  and  says :  "But  if  the 
manufacturers,  who  ask  us  to  believe  that  the  retention  of  the 
'sweating'  system  is  an  economic  necessity,  would  only  mus- 
ter up  sufficient  energy  to  erect  proper  factories  provided 
with  improved  machinery  run  by  steam  power,  then,  with 
suitable  organization,  they  would  find  it  perfectly  feasible 
to  sell  their  goods  as  cheap  as  ever,  and  yet  to  pay  decent 
wages  to  their  work  people."*  But  to  how  many  of  them 
That  is  the  question.  When  a  machine  is  introduced  which 
at  one  stroke  cuts  through  twenty  or  more  thicknesses  of 
cloth  a  great  number  of  cutters  are  dispensed  with,  not  be- 
cause they  are  incapable — for  the  man  skilled  enough  t(.>  cut 


*Giffen,  Gross  and  Net  Gain  of  Rising  Wages,  Contemporary,  De- 
cember, 1889. 


LABOR-SAVING    DEVICES.  279 

after  a  pattern  ought  to  be  more  than  capable  of  attending 
a  cutting  machine — but  because  they  are  not  required. 

But  even  though  the  displaced  workmen  may  be  relegated 
to  the  "social  wreckage"  described  by  Gififen,  they  still  re- 
main a  factor  in  the  industrial  problem.  Their  constant 
efforts  to  escape  complete  submergence  make  the  unem- 
ployed ready  to  underbid  their  fellows  who  have  been  suc- 
cessful in  entering  the  new  society.  The  result  of  this  is 
to  lower  the  wages  of  machine  operators,  and  the  secondary 
effect  is  to  make  it  increasingly  difficult  in  countries  where 
manufacturing  industries  have  been  long  established  to  in- 
troduce labor-saving  machinery.  The  swelling  of  the  ranks 
of  the  "sweated"  and  of  the  illy  paid  classes  such  as  those 
Schloss  describes  as  working  in  the  Midland  nail  industry 
is  not  the  cause  of  an  evil :  it  is  merely  a  manifestation  of  its 
existence. 

In  spite  of  the  airy  assumptions  of  the  economists  it  is 
impossible  in  practice  to  easily  displace  large  bodies  of  hand 
operatives  such  as  those  working  in  the  Midland  nail  works. 
They  cannot  be  turned  over  to  the  cold  charities  of  the  world 
as  they  would  have  to  be  if  machine  nail  making  were  ab- 
ruptly introduced  as  Mr.  Schloss  suggests.  The  manufac- 
turers understand  this  perfectly.  They  would  cheerfully 
introduce  the  labor-saving  machines  if  they  felt  that  they 
dared  do  so.  But  they  recognize  the  increased  difficulty  of 
dealing  with  large  bodies  of  men  suddenly  deprived  of  em- 
ployment, and  fear  for  the  safety  of  life  and  property  pro- 
motes caution. 

That  this  latter  motive  has  a  powerful  influence  no  one 
will  question  who  is  at  all  familiar  with  the  history  of  the 
Welsh  tin  industr>%  in  which  the  introduction  oi  improved 
methods  of  manufacture  was  steadily  resisted  by  the  work- 
ers, even  when  threatened  with  loss  of  employment  throno-h 
American  competition.  Whether  Wales  could  liave  pre- 
served her  monopoly  of  the  manufacture  of  tinned  plates  in 
the  face  of  the  determination  of  the  people  of  the  United 


28o         PROTECTION   AND   PROGRESS 

States  to  create  a  tinned  plate  industry  in  their  own  country 
if  the  mill  owners  had  promptly  resorted  to  the  use  of 
labor-saving  machinery  will  not  be  discussed  here.  But  it 
may  be  remarked  that  the  effect  of  reducing  the  number  of 
workingmen  employed  in  the  making  of  tin  plates  in  the 
Welsh  mills  has  not  conferred  a  benefit  on  those  who  man- 
aged to  retain  their  positions,  for  it  has  been  found  that  the 
manipulation  of  machines  requires  in  many  cases  less  skill 
than  was  needed  to  make  plates  by  hand. 

Mr.  Schloss,  disregarding  experiences  of  this  kind,  as- 
serts that  the  substitution  of  machine  for  hand  labor  always 
results  in  a  permanent  bettering  of  the  condition  of  the 
workers  fortunate  enough  to  obtain  employment  under  the 
changed  conditions.  His  views,  however,  are  not  shared  by 
members  of  trades  unions,  who  have  an  intimate  knowledge 
of  the  practical  workings  of  such  changes  and  know  that  the 
result  is  as  a  rule  disastrous  to  large  numbers  of  their  class, 
who  are  forced  by  their  operation  to  become  part  of  the 
social  wreckage. 

The  attitude  of  the  members  of  the  British  unions  on 
the  question  is  instructive.  A  fair  knowledge  of  it  may  be 
obtained  from  the  statement  of  Alfred  F.  Yarrow,  of  the 
great  English  shipbuilding  firm,  made  to  a  reporter  of  a  New 
York  paper  in  January,  1889,  who  questioned  him  regarding 
an  offer  which  he  had  made  through  the  London  Times  to 
the  striking  engineers  of  Great  Britain.  Mr.  Yarrow  had 
informed  the  strikers  that  if  they  would  select  a  committee 
of  three  or  four  men  to  visit  America,  inspect  the  manufac- 
turing plants  here  and  make  a  report  to  their  associates  at 
home  he  would  gladly  defray  the  expenses  of  their  trip.  To 
the  reporter  Mr.  Yarrow  explained  his  purpose  by  saying: 
"American  iron  and  steel  workers  are  better  paid  than  the 
English,  but  they  do  far  more  than  proportionately  better 
work.  It  seems  to  be  the  rule  for  each  man  (in  America)  to 
do  as  much  as  he  can,  while  at  home  every  one  is  afraid 
of  injuring  his  fellow  workman  and  does  no  more  than  he 


LABOR-SAVING    DEVICES.  281 

has  to.  One  noticeable  thing  in  connection  with  this  is  the 
tending  of  automatic  machines.  I  have  seen  one  man  in 
charge  of  several  machines  here,  while  at  home  it  is  against 
the  rules  of  the  union  for  a  man  to  tend  more  than  one. 
Consequently  he  is  idle  a  considerable  part  of  the  time."* 

There  is  no  hint  in  this  statement  that  Mr.  Yarrow  re- 
garded the  American  workingman  as  naturally  superior  to 
the  British.  On  the  contrary,  his  offer  to  pay  the  expenses 
of  a  visiting  committee  of  British  engineers  implies  that  he 
believed  that  it  would  only  be  necessary  for  such  a  body  to 
report  to  their  fellows  at  home  that  Americans  were  gaining 
an  advantage  because  they  worked  more  industriously,  and 
were  tolerant  of  labor-saving  machines  to  bring  about  an 
instant  disposition  on  the  part  of  the  striking  engineers  to 
accept  the  terms  of  their  employers,  which  embodied  the 
demand  that  the  latter  should  be  permitted  to  manage  their 
own  afifairs  without  interference  from  the  union  so  far  as 
the  regulation  of  machine  tasks  and  piece  work  was  con- 
cerned. 

Mr.  Yarrow  is  an  extremely  successful  shipbuilder,  but 
it  is  quite  evident  that  he  was  mistaken  when  he  thought 
that  the  arguments  which  appealed  so  forcibly  to  him  as  an 
employer  would  strike  the  engineers  in  the  same  fashion.  He 
was  generous  enough,  however,  in  his  statement  to  assign  the 
true  cause  of  the  British  workingman's  opposition  to  the 
employment  of  one  man  to  attend  several  automatic  ma- 
chines, and  did  not,  as  too  many  do,  rashly  assume  that  it  is 
prompted  by  the  desire  to  escape  work.  He  says  plainly  that 
the  English  engineers  are  afraid  of  injuring  their  fellow 
workingmen,  meaning  by  this  that  they  clearly  recognize  that 
the  introduction  of  labor-saving  machinery,  while  it  ought 
to  be  a  gain  to  society  generally,  really  results  in  swelling 
the  army  to  which  Sir  Robert  Giffen  referred  when  he  spoke 
of  the  "social  wreckage"  created  by  the  march  of  modern 
improvement. 

*Schloss,  The  Dearness  of  Cheap  Labor,  Fortnightly,  January,  1893. 


282         PROTECTION   AND   PROGRESS 

It  must  not  be  inferred  from  Mr.  Yarrow's  testimony 
that  the  workingman's  motives  are  wholly  unselfish.  The 
trades  union  system  has  promoted  a  marvelous  solidarity, 
and  toilers  under  its  stimulus  are  ready  to  make  sacrifices 
for  each  other  which  have  the  hall  mark  of  true  heroism. 
But  underlying  the  sentimental  devotion  to  their  cause  is  a 
keen  appreciation  of  the  fact  that  their  contest  is  one  for 
existence.  The  war  of  the  workers  against  automatic  ma- 
chines— for  that  is  what  the  refusal  to  permit  them  to  be 
worked  to  their  full  capacity  amounts  to — and  the  struggle 
for  a  shorter  day's  work  is  due  to  their  perception  of  the 
fact  that  a  greatly  diminished  demand  for  workingmen  op- 
erates to  increase  the  social  wreckage,  and  that  the  pressure 
of  the  latter  in  turn  results  in  reducing  the  wages  of  those 
who  attend  machines. 

The  defect  in  the  reasoning  of  those  who  assume  that 
the  British  workingmen  are  irrational  in  opposing  labor- 
saving  devices  is  their  failure  to  attach  due  importance  to 
the  possibilities  which  may  flow  from  their  general  use. 
They  concentrate  their  attention  upon  the  success  achieved 
in  the  United  States  and  disregard  the  fact  that  the  condi- 
tions which  made  this  success  possible  are  disappearing. 
The  signs  are  constantly  multiplying  that  the  facilities  for 
the  production  of  manufactured  articles  in  this  country  are 
rapidly  outstripping  effective  consumption.  The  fierce  labor 
wars  witnessed  at  short  intervals,  tiie  growing  strength  of 
the  unions  and  the  recurring  periods  of  depression  in  the 
United  States  indicate  that  we  are  making  startling  progress 
in  the  direction  of  a  state  of  affairs  which  will,  if  tiiere  is  no 
improvement  in  the  distributive  system,  compel  American 
workingmen  to  adopt  the  same  attitude  toward  their  em- 
ployers as  that  assumed  by  the  British  workingmen. 

If  the  theory  of  the  economists  who  preach  the  doctrine 
of  the  greater  efficiency  of  labor  were  sound  we  might  hope 
to  escape  the  difficiflties  which  confrotit  ns.  1'ut  there  is  no 
foundation  for  the  assumption  that  American  workers  differ 


LABOR-SAVING  DEVICES  283 

essentially  from  those  of  other  countries.  That  they  are 
now  willing  to  exert  themselves  to  the  utmost  is  probably  clue 
to  the  circumstance  pointed  out  by  an  acute  English  observer 
that  the  United  States  is  still  a  country  of  possibilities.  This 
writer  remarks:  "Life  here  (in  the  United  States)  has  a 
vigor  about  it  wholly  unknown  in  Europe.  The  contrast  be- 
tween the  slow  dalliance  of  the  British,  French  or  German 
laborer  starting  for  a  day's  work  with  the  impetuosity  and 
absolute  disregard  for  personal  safety  in  the  rush  which 
characterizes  the  competing  classes  here  is  very  striking."'' 
This  state  of  affairs  is  due  to  t4ie  belief  of  the  bread  winner 
in  America  that  he  may  hope  to  better  his  condition.  It  is 
the  opinion  of  this  foreign  critic  that  it  is  this  hope  that 
induces  workers  in  America  to  accept  heavier  tasks  than 
common  abroad.  "Europeans,"  she  says,  "soon  discover  that 
there  are  very  few,  if  any,  stereotyped  positions  as  there  arc 
in  older  countries."  But  the  "elastic  possibilities  which 
foster  effort  and  ambition  and  make  success  an  honorable 
thing  worth  striving  for  and  valuable  when  attained"!  stim- 
ulate the  American  worker  to  accept  the  new  and  to  some 
extent  harder  conditions,  and  to  feel  that  he  is  not  imposed 
upon  in  doing  so. 

How  long  this  feeling  can  survive  in  the  United  States  i  ■ 
a  question  worth  considering  by  those  who  entertain  the  view 
that  the  beneficent  results  attending  the  introduction  of 
labor-saving  machinery  must  outweigh  the  admitted  evils 
which  follow  the  displacement  of  large  bodies  of  workers. 
and  by  those  economists  who  hold  to  the  opinion  that  this 
country  enjoys  a  marked  advantage  over  others  in  the  pos- 
session of  a  population  of  workers  capable  and  willing  to 
exert  themselves  to  the  utmost.  If  there  is  ground  for  the 
belief  that  the  development  of  the  facilities  of  jiroduction 
have  outstripped  effective  consumption  we  should  not  shrink 


♦Yarrow,  Alfred  F.,   Interview  with  in   New  York   Herald,  Jan.   9, 

3. 

fRuntz,  Rees,  Wage  Values  in  America,  Westminster,  July,   1890. 


284         PROTECTION   AND   PROGRESS 

from  contemplating  the  possibilities  or  attempt  to  lull  our- 
selves into  a  feeling  of  false  security  by  accepting  theories 
as  untenable  as  those  embodied  in  the  "efficiency  of  labor 
idea."  It  would  certainly  be  a  mistake  to  assume  that  any 
of  the  feats  accomplished  by  American  vvorkingmen  cannot 
be  imitated  by  Englishmen  or  their  continental  brethren. 
The  virtues  pointed  out  by  Mr.  Yarrow  as  giving  the  Ameri- 
can shipbuilder  an  advantage  over  his  British  competitor 
may  be  easily  adopted.  The  trades  unionists  of  Great  Britain 
are  not  entirely  unamenable  to  reason.  They  are  doing  all 
in  their  power  to  prevent  the  increase  of  "social  wreckage," 
but  they  are  not  uninfluenced  by  the  argument  that  their 
resistance  to  the  innovations  they  dread  may  result  in  worse 
disaster  to  them  than  the  pauperization  of  a  part  of  their 
number,  and  they  show  a  disposition  to  yield.  It  was  the 
apprehension  created  by  the  obvious  encroachments  upon 
various  branches  of  the  British  machine  manufacturing  in- 
dustry by  Americans  and  Germans  which  in  1898  forced  the 
striking  engineers  of  England  to  submit,  and  the  same  fear 
will  doubtless  have  the  effect  of  compelling  further  conces- 
sions from  the  unions. 

But  in  making  these  concessions  the  workingmen  do  not 
deceive  themselves.  They  foresee  the  result  far  better  than 
Messrs.  Schoenhoff,  Schloss,  Giffen  and  others,  who  persist- 
ently refuse  to  give  due  consideration  to  the  probable  re- 
actionary effect  of  the  constant  increase  of  the  submerged 
class,  from  which  the  army  of  the  sweated  is  recruited. 
As  previously  pointed  out,  the  existence  of  an  excessive 
population  in  England  ready  to  accept  the  exacting  condi- 
tions imposed  on  the  nail  makers  is  a  constant  menace  to 
what  some  erroneotisly  term  the  higher  forms  of  labor. 
Experience  has  abundantly  demonstrated  in  England  that 
the  competition  for  employment  in  factories  where  machinery 
is  used  is  excessive,  and  that  in  spite  of  the  efforts  of  trades 
unions  to  secure  for  their  members  as  large  a  share  of  the 
fruits  of  their  industry  as  possible  the  advance  in  wages  bears 


LA,BOR-SAVING  DEVICES  285 

no  proportion  to  the  enormous  increase  of  production  result- 
ing from  the  substitution  of  machine  for  hand  labor. 

Sir  Robert  Giffen,  although  he  makes  a  strong  argument 
to  support  his  contention  that  society  generally  has  been 
the  gainer  by  the  introduction  of  labor-saving  machinery, 
admits  that  "workmen  in  particular  employments  do  not 
get  a  reward  at  all  in  proportion  to  the  increase  of  production 
in  those  employments."  He  cites  the  familiar  cotton  mill 
in  which  "a  single  attendant  on  a  number  of  machines  will 
'produce'  as  much  in  an  hour  as  formerly  in  a  year  or  two, 
but  his  wages  are  only  double — or  perhaps  not  quite  double — 
what  they  were  when  the  production  was  so  much  less.  A 
great  steamship  supplies  another  illustration.  The  ship  does 
many  times  the  work  which  could  have  been  performed  by 
the  sailing  ship  it  has  displaced  and  with  much  fewer  men  in 
proportion  to  the  tonnage  conveyed.  But  the  wages  of  the 
average  member  of  the  crew  are  again  only  double,  or  not 
quite  double,  what  they  were  when  the  conveyance  done  was 
so  much  less.  In  these  and  similar  cases  who  gets  the  benefit 
of  all  the  increase  of  production?  The  workmen  in  the 
particular  employments  concerned  receiving  only  a  fraction 
of  the  gain  may  be  excused  for  suspecting  that  there  is  some- 
thing inexplicable  in  these  social  and  economic  arrangements 
by  which  the  benefit  is  spirited  away  from  them."* 

Avoiding  all  reference  to  the  effects  on  society  in  gen- 
eral and  confining  the  discussion  to  the  question  whether  the 
workingman,  reasoning  from  past  experience,  can  look  for- 
ward to  the  further  use  of  labor-saving  machinery  to  improve 
his  condition,  it  must  be  admitted  that  the  prospect  for  him 
is  by  no  means  so  encouraging  as  the  optimistic  originators 
of  the  efficiency  of  labor  theory  would  have  us  believe.  If 
the  effect  of  the  additions  to  the  world's  facilities  for  dis- 
pensing with  human  handiwork  have  been  as  described,  what 
reason  is  there  to  suppose  that  the  further  enlargement  which 

*Runtz,  Rees,  Wage  Values  in  America,  Westminster,  July,  1890. 


286         PROTECTION   AND   PROGRESS 

is  going  on  in  an  almost  geometrical  ratio  will  benefit  the 
toiler? 

As  yet  the  disposition  to  employ  evtry  conceivable  labor- 
saving  device  without  regard  to  consequences  has  only  man- 
ifested itself  in  the  United  States.  What  will  happen  when 
the  methods  are  generally  adopted  which  have  been  tolerated 
in  this  country,  largely  because  up  to  the  present  time,  in 
spite  of  the  rapid  development  of  manufactures,  it  has  been 
found  impossible  to  meet  the  demand  of  an  entrenched  mar- 
ket except  by  a  resort  to  the  most  rapid  means  of  produc- 
tion ?  There  is  no  ground  for  assuming  that  the  introduction 
of  nail  making  machinery  into  England  would  not  be  fol- 
lowed by  the  adoption  of  similar  or  even  more  improved 
processes  in  Belgium,  Germany,  Russia  and  the  Orient.  The 
result  would  be  an  enormously  enlarged  output  without  a 
corresponding  enlargement  of  the  world's  consumptive  abil- 
ity. The  displaced  handworkers  would  join  the  rapidly 
increasing  army  of  the  submerged,  while  the  number  of 
human  beings  who  belong  to  "the  new  society"  pictured  by 
Sir  Robert  Giffen  would  relatively  diminish.  The  active 
contingent  in  "the  new  society"  would  inevitably  be  subjected 
to  a  competition  infinitely  more  severe  than  any  hitherto 
experienced  by  the  working  classes,  for,  as  experience 
teaches,  difficulties  of  this  nature  are  cunmlative,  not  only  as 
to  the  multiplication  of  their  number,  but  in  intensity. 

Whatever  the  increased  resort  to  labor-saving  machinery 
may  accomplish,  it  does  not  hold  out  the  hope  to  working 
people  generally  that  their  condition  will  be  bettered ;  nor, 
as  already  pointed  out,  is  there  a  reasonable  certainty  that 
the  survivals,  those  fortunaic  enough  to  escape  the  fate  of 
being  cast  among  "the  social  wreckage,"  will  derive  a  per- 
manent advantage  unless  there  is  a  readjustment  of  the 
benefits  flowing  from  improved  processes  which  will  give 
the  actual  worker  a  greater  share  than  is  implied  in  a  doub- 
ling of  wages  as  the  result  of  a  twcntyfold  increase  of  out- 
put.   And  this  doubling  which  Sir  Robert  Giflfen  says  has 


LABOR-SAVING    DEVICES.  287 

occurred  can  only  be  regarded  as  temporary,  for,  in  spite 
of  all  the  attempts  to  demonstrate  that  the  workingman  who 
escapes  submergence  is  bettered  by  modern  improvements, 
there  is  a  growing  mass  of  testimony  that  there  is  a  steady 
tendency  of  wages,  both  nominal  and  real,  to  decline  under 
the  stress  of  the  competition  of  the  increasing  number  fitted 
to  meet  the  exacting  conditions  of  modern  industry,  but  who 
are  unable  to  find  work. 

There  is  an  unwarranted  assumption  that  the  "social 
wreckage"  described  by  Sir  Robert  Giffen  represents  in- 
capacity. Sir  Robert  himself  says  that  "a  class  may  con- 
tinue to  exist  and  even  increase  in  the  midst  of  our  civiliza- 
tion, possibly  not  a  large  class  in  proportion,  but  still  a  con- 
siderable class,  who  are  out  of  the  improvement  altogether, 
who  are  capable  of  nothing  but  the  rudest  labor,  and  who 
have  neither  the  moral  nor  the  mental  qualities  fitted  for 
the  strain  of  the  work  of  modern  society."  How  did  Sir 
Robert  obtain  the  information  which  enables  him  to  pass  so 
harsh  a  judgment  on  the  "social  wreckage"  of  modern  in- 
dustrialism? How  does  he  know  that  there  is  a  lack  of 
capacity?  How  can  any  one  affirm  that  men  are  incapable 
when  the  conditions  are  such  that  it  is  impossible  for  them 
to  obtain  an  opportunity  to  demonstrate  their  capacity? 

No  doubt  the  army  of  the  submerged  contains  a  large 
number  of  inefficients,  but  how  many  of  them  have  been 
made  so  by  circumstances  ?  There  is  no  more  erroneous  idea 
prevalent  than  that  which  credits  workingmen  who  have 
been  fortunate  enough  to  retain  jobs  while  their  comrades 
were  relegated  to  the  social  wreckage  with  being  exponents 
of  the  truthfulness  of  the  theory  of  the  survival  of  the  fit- 
test. A  personal  experience  of  the  writer  convinced  him  of 
the  fallacy  of  this  too  common  assumption,  and  it  may  be 
related  as  being  typical  of  the  process  and  the  results  which 
follow  the  introduction  of  the  labor-saving  machines.  In 
the  year  1895  the  proprietor  of  the  newspaper  under  the 
supervision  of  the  writer  concluded  to  introduce  the  linotype 


288         PROTECTION   AND   PROGRESS 

machine  into  his  composition  room.  Being  desirous  of 
retaining  as  many  as  possible  of  the  printers  in  his  employ 
at  the  time  of  the  innovation  he  concluded  to  bear  the  burden 
of  educating  the  force  necessary  to  manipulate  the  machines. 
No  experts  were  employed,  but  the  old  hands,  under  the  tui- 
tion of  one  or  two  moderately  expert  men  already  working 
for  the  paper,  learned  to  run  the  machines.  There  were 
seventeen  machines  introduced,  and  they  were  capable  of 
performing  the  work  of  at  least  fifty  compositors.  It  there- 
fore became  necessary  to  make  a  selection  from  the  force. 
It  was  soon  discovered  that  the  man  who  had  been  a  dexter- 
ous typesetter  would  experience  no  great  difficulty  in  manip- 
ulating the  keyboard  of  the  linotype ;  or,  to  put  it  in  another 
form,  the  whole  corps  of  printers,  had  they  been  afforded 
an  opportunity,  could  have  achieved  a  greater  or  less  degree 
of  success  as  linotype  operators.  The  matter  finally  resolved 
itself  into  a  question  of  selecting  those  who  had  been  longest 
in  the  service  of  the  paper  or  who  had  in  some  manner  or 
other  shown  devotion  to  its  interests.  The  men  displaced 
by  the  machines,  had  they  been  fortunate  enough  to  secure 
a  job,  would  doubtless  have  shown  as  much  efficiency  as 
those  retained,  but  they  were  compelled  to  seek  new  fields 
for  their  labor,  or,  failing  in  that,  to  join  the  social  wreckage. 
It  is  not  venturing  much  to  say  that  the  illustration  fur- 
nishes a  complete  disproof  of  the  theory  that  the  members 
of  the  social  wreck  owe  their  misfortunes  to  their  own  in- 
capacity. The  linotype  is  a  complicated  machine  requiring  a 
high  degree  of  skill  in  its  manipulation ;  yet  it  was  found 
that  an  average  body  of  men,  accustomed  all  their  days  to 
the  performance  of  an  essentially  different  character  of 
manual  work,  could  speedily  adapt  themselves  to  the  new 
requirement  Had  it  been  a  mere  substitution  of  machine 
for  hand  labor  not  requiring  a  reduction  of  the  force  of 
workers  there  is  no  doubt  that  every  one  of  the  printers 
referred  to  could  have  fitted  himself  for  the  change.  This 
negatives  the  idea  of  survival  of  the  fittest  and  shows  con- 


LABOR-SAVING    DEVICES.  289 

clusively,  in  this  case  at  least,  that  the  matter  resolves  itself 
into  one  of  elimination.  The  machines  enabled  the  employer 
to  dispense  with  a  certain  number  of  men  and  he  availed 
himself  of  the  opportunity.  The  economists  assume  that  the 
displaced  find  new  grooves  to  fill,  but  the  testimony  is  over- 
whelming that  a  constantly  increasing  number  are  entirely 
excluded  from  the  "new  society"  and  forced  to  become  part 
of  the  "social  wreckage,"  not,  however,  without  struggling 
against  the  hard  fate  imposed  upon  them.  The  struggles  of 
the  excluded  take  the  form  of  securing  employment  at  any 
price,  and  their  vain  efforts  to  save  themselves  from  com- 
plete submergence  have  the  effect  of  reducing  the  wages  of 
those  fortunate  enough  to  retain  employment. 

It  is  the  perception  of  this  fact,  that  the  "social  wreck- 
age" is  a  constant  menace  to  the  workingman,  that  makes 
trades  unionism  so  strong  in  Great  Britain  and  is  respon- 
sible for  that  attitude  of  hostility  to  automatic  and  other 
labor-saving  machines  which  does  not  manifest  itself  in  open 
violence,  but  takes  the  form  of  an  attempt  to  minimize  the 
value  of  the  improved  machinery  by  preventing  its  thorough 
utilization.  The  workingmen  of  Great  Britain  are  con- 
vinced that  the  effect,  so  far  as  they  are  concerned,  of  the 
use  of  the  ingenious  machines  which  do  the  work  of  five 
men  is  to  diminish  the  number  of  workers  and  to  intensify 
the  struggles  for  the  positions  that  are  left.  They  do  not 
accept  the  optimistic  view  of  the  Schoenhoffs  and  the 
Schlosses  that  their  class  will  benefit  in  proportion  as  pro- 
ductivity is  increased.  They  have  the  evidence  of  a  twenty- 
fold  increase  of  output  and  a  wage  scarcely  doubled  con- 
fronting them,  and  they  cannot  be  induced  to  shut  their  eyes 
to  the  fact  that  the  army  of  the  unemployed  is  being  daily 
reinforced,  nor  can  the  individual  worker  get  rid  of  the  fear 
that  he  too  may  any  day  be  forced  to  join  its  ranks. 

This  fear  is  not  likely  to  be  diminished  by  the  success  of 
the  employers  in  the  recent  strike  of  the  British  enq;ineers. 
The  triumph  referred  to  will  have  the  practical  effect  of 

19 


290         PROTECTION   AND   PROGRESS 

suspending'  for  a  time  tlie  efforts  of  llie  unions  to  interfere 
with  the  introduction  and  more  extended  use  of  labor-saving 
machines,  but  the  advocate  of  the  efficiency  of  labor  theory 
will  hardly  point  to  it  as  corroboration  of  the  soundness  of 
his  views,  for  the  submission  of  the  engineers  was  only  se- 
cured when  the  fact  was  made  clear  to  them  that  unless 
they  submitted  to  the  conditions  which  they  deemed  onerous 
the  Germans,  Belgians  and  Americans  would  take  away 
British  trade  and  thus  leave  them  without  an  opportunity  to 
earn  a  living  on  any  terms.  It  was  a  case  of  the  acceptance 
of  half  a  loaf  rather  than  do  without  any  bread  at  all,  and 
is  in  no  sense  to  be  regarded  as  a  recognition  of  the  sound- 
ness of  the  contention  that  the  freer  use  of  labor-saving 
machinery  is  beneficial  to  the  working  classes.  And  it  may 
be  added  that  no  sensible  observer  of  the  struggle  now  in 
progress  believes  that  those  who  retain  their  places  after 
the  process  of  elimination  which  must  follow  the  compulsory 
attendance  by  British  worlvcrs  of  more  machines  than  for- 
merly will  be  benefited  by  an  increase  of  the  wage  scale. 

There  was  no  pretense  throughout  the  long  and  bitter 
fight  that  such  would  be  the  result.  On  the  contrary,  it 
was  distinctly  stated  on  behalf  of  the  employers  that  they 
were  forced  to  the  course  they  took  by  the  pressure  of  com- 
petition. They  were  compelled,  they  said,  to  meet  the  lower 
wages,  longer  hours  and  better  methods  of  foreigners  by 
what  amounted  to  a  practical  reduction  of  the  wages  of 
British  workers.  This  being  the  case,  it  is  idle  to  hold  out 
the  hope  that  the  increased  productiveness  due  to  the  still 
larger  employment  of  automatic  machinery  will  result  in  a 
higher  wage  scale.  Experience  shows  that  even  those  for- 
tunate enough  to  secure  an  increase  cannot  look  upon  their 
gain  as  permanent ;  the  ever  increasing  competition  forbids 
any  such  thought.  It  points  rather  to  increased  difficulty 
in  retaining  work  and  diminished  compensation  to  the 
worker. 

This  is  how  the  American  worker  is  beginning  to  look 


LABOR-SAVING  DEVICES  291 

at  the  matter.  It  is  possible  tliat  for  some  time  to  come  he 
may  feel  the  spur  of  "possibility"  and  respond  to  it,  but  as 
the  chances  of  bettering  himself  decrease  the  stimulus  to 
exertion  will  disappear  and  he  will  become  more  and  more 
like  his  fellow  in  Great  Britain,  His  pace  in  that  direction 
will  be  accelerated  if  the  barriers  of  protection  are  thrown 
down  and  he  is  forced  to  meet  the  whole  world  on  even  terms. 
By  diminishing  the  area  of  competition  the  American  worker 
is  relieved  of  part  of  the  pressure  and  the  rewards  for  his 
toil  are  larger.  The  non-productive  consumer,  who,  under 
the  law  of  universal  competition,  benefits  without  contrib- 
uting to  the  increase  of  productivity,  is  forced  by  the  pro- 
tective tariff  of  the  United  States  to  assist  in  stimulating 
the  worker  to  increased  exertion  by  being  compelled  to  pay 
higher  prices  than  he  would  be  obliged  to  if  there  was  any- 
thing like  an  approach  to  uniform  development  of  manufac- 
turing throughout  the  civilized  world.  Withdraw  this  stim- 
ulus and  allow  manufactured  croods  to  come  in  freely  from 
all  countries  and  the  result  would  be  an  equalization  of  the 
conditions  of  the  workers.  And  it  would  not  be,  as  the 
efficiency  of  labor  theorists  assume,  in  the  direction  of  a 
general  lifting  up;  on  the  contrary,  the  working  people  of 
the  nations  willing  to  accept  the  least  remuneration  would 
set  the  pace  for  all  others. 


CHAPTER  XIV. 
PRODUCTION  AND  CONSUMPTION. 

THE  GROWING  TENDENCY  TO  OVERPRODUCE  AND     ITS    CONSE- 
QUENCES. 

Rapid  development  of  industrialism — The  menace  of  a  general  glut 
— Overproduction  the  subject  of  a  British  inquiry — Competition 
results  in  depriving  producers  of  a  fair  profit — Excessive  pro- 
duction in  the  United  States — The  ability  to  produce  enor- 
mously exceeds  the  effective  consumptive  demand — Develop- 
ment of  manufactures  likely  to  proceed  more  rapidly  in  the 
future  than  in  the  past — Growth  of  the  world's  iron  industry 
in  thirty-six  years — Overproduction  compels  the  unloading  of 
surpluses  on  foreigners  to  preserve  the  home  market — Free 
trade  does  not  establish  equal  conditions — Problems  called  into 
existence  by  a  general  determination  to  promote  industrial  de- 
velopment— Labor-saving  machinery  that  produces  enough  in  a 
few  days  to  supply  the  effective  demand  for  a  year — The  hope 
that  the  Orient  would  afiford  a  dumping  ground  for  the  surplus 
of  Western  manufacturing  nations  gradually  declining — Atti- 
tude of  protectionists  towards  competition — The  doctrines  of 
Malthus  and  their  relation  to  modern  economics — The  middle- 
man a  sufferer  from  excessive  competition — The  markets  of 
the  world  and  overproduction. 

In  the  two  preceding  chapters  it  was  shown  that  mod- 
ern political  economists  in  an  effort  to  bolster  the  teachings 
of  Cobdenism  deluded  themselves  and  their  followers  into 
believing  that  the  ability  to  develop  a  high  form  of  indus- 
trial organization  was  confined  to  a  few  nations.  The 
error  of  the  assumption  that  the  advanages  enjoyed  by 
certain  nations  today  is  due  to  racial  superiority  was  ex- 
posed by  citing  facts  from   history  which  show  that  the 

world  is  in  a  constant  state  of  industrial  evolution,  and 

292 


CONSUMPTION  293 

that  the  backward  peoples  of  one  period  are  in  the  van  of 
progress  in  the  next.  An  examination  was  also  made  of 
the  causes  which  contribute  to  the  ability  of  the  people  of 
some  countries  in  the  present  day  to  produce  more  cheaply 
than  others,  and  it  was  disclosed  that  any  superiority  dis- 
played was  not  due  to  natural  capacity,  but  was  the  result 
of  acquired  skill  or  a  willingness  on  the  part  of  the  suc- 
cessful to  put  forth  greater  exertions  than  rivals.  It  was 
also  shown  that  the  stimulating  effect  of  the  introduction 
of  labor-saving  machinery  soon  loses  its  force  and  that 
workingmen  speedily  assume  a  hostile  attitude  towards 
innovations.  When  the  toiler  discovers  that  the  benefits 
of  the  improved  labor-saving  devices  are  almost  wholly 
engrossed  by  those  who  do  not  toil  there  arises  a  tendency 
on  his  part  to  hinder  rather  than  promote  the  efficient  work- 
ing of  automatic  and  other  devices  for  dispensing  with 
the  use  of  hand  labor. 

In  this  chapter  an  effort  will  be  made  to  show  that  this 
tendency  to  interfere  with  the  use  of  labor-saving  devices 
must  be  greatly  increased  unless  some  means  can  be  dis- 
covered by  which  the  benefits  resulting  from  the  saving 
■effected  may  be  more  evenly  distributed.  The  purpose 
of  the  inquiry  is  not  to  exploit  socialistic  theories,  but  to 
expose  as  fully  as  possible  the  fallacy  which  underlies  the 
idea  that  the  workingman  can  hope  for  relief  from  the  dan- 
ger of  non-employment  which  constantly  confronts  him  by 
intensifying  competition. 

We  have  seen  from  the  quotations  submitted  in  discus- 
sing the  question  of  the  ability  of  men  of  average  intelli- 
gence adapting  themselves  to  the  manipulation  of  labor- 
saving  machinery  that  certain  economists  hold  the  view 
that  the  adoption  of  the  most  highly  developed  forms  of  sav- 
ing energy  by  the  manufacturers  of  a  nation  is  all  that  is 
necessary  to  insure  the  prosperity  of  its  working  people, 
the  theory  being  that  the  ability  to  produce  on  the  same  or 
better  terms  than  rivals  is  all  that  is  required  to  bring  about 


294         PROTECTION   AND   PROGRESS 

such  a  result.  But  this  theory  takes  no  account  of  the  fact 
that  if  the  nations,  which  are  merely  aggregates  of  units, 
exert  themselves  to  the  utmost  they  must  intensify  the  evil 
of  overproduction.  If  individuals  competing  with  each 
other  in  a  few  countries  with  highly  developed  industries 
can  bring  about  the  result  noted  by  Sir  Robert  Giffen,  of 
relegating  a  large  proportion  of  their  fellow  creatures  to 
a  condition  described  as  "social  wreckage,"  what  will  fol- 
low when  all  the  nations  now  animated  by  the  desire  to 
join  the  march  of  improvement  have  succeeded  in  establish- 
ing manufacturing  plants  capable  of  supplying  their  own 
wants  and  a  surplus  for  export? 

That  many  nations  now  dependent  for  supplies  of  man- 
ufactured articles  upon  the  countries  foremost  in  the  mod- 
ern industrial  development  are  capable  of  reaching  the 
stage  of  self-dependence  in  a  comparatively  brief  period 
no  competent  observer  doubts.  Even  those  who  have  leaned 
to  the  idea  that  the  remarkable  superiority  in  manufacturing 
industries  displayed  by  Western  peoples  is  evidence  of  their 
special  fitness  for  such  pursuits  are  occasionally  betrayed 
into  admissions  fatal  to  the  assumption  that  a  competitive 
contest,  in  which  the  whole  world  may  take  part,  will  prove 
beneficial  to  mankind.  Indeed,  if  the  views  of  the  free 
traders  are  narrowly  examined  it  will  be  seen  that  the  hope 
of  the  Western  world  remaining  supreme  industrially  is 
based  on  the  expectation  that  some  nations  will  always  con- 
tinue in  a  state  of  dependence. 

There  has  until  recently  been  a  firm  belief  that  there 
would  always  be  an  increasing  external  market  ready  to 
absorb  the  surplus  of  those  countries  capable  of  produc- 
ing in  excess  of  their  own  needs.  The  foremost  exponent 
of  the  free  trade  idea  in  the  United  States  in  1892*,  and  the 
author  of  a  bill  designed  to  give  this  country  a  tariff  sys- 
tem resembling  that  of  Great  Britain,  in  a  speech  advocating 
his  measure  expressed  the  conviction  that  any  sacrifice 
*MiIls,  chairman  House  Committee  on  Ways  and  Means. 


CONSUMPTION  295 

of  the  home  market  which  might  resuh  from  the  operations 
of  his  revenue  scheme,  if  it  were  carried  into  effect,  would 
be  more  than  compensated  by  the  gain  of  foreign  markets. 
His  contention  was  not  that  we  should  be  enabled  to  increase 
our  exports  of  agricultural  and  similar  products  and  thus 
offset  the  loss  which  would  follow  the  surrender  of  part 
of  our  home  market  to  the  foreign  manufacturer,  but  he 
urged  that  the  effect  of  striking  down  the  protective  bar- 
riers would  be  to  put  us  in  a  position  to  compete  with  other 
countries  for  the  trade  of  those  peoples  who  were  supposed 
to  be  incapable  of  developing  a  manufacturing  industry 
of  their  own. 

In  another  place  the  extent  of  the  markets  of  coun- 
tries showing  no  disposition  to  manufacture  for  them- 
selves will  be  discussed  and  the  possibility  of  any  very  con- 
siderable enlargement  of  them  will  be  investigated,  but 
our  inquiry  here  will  be  confined  more  particularly  to  the 
ascertainment  of  the  capabilities  of  what  may  be  termed 
the  surplus  nations.  The  results  have  in  a  measure  been 
foreshadowed  in  the  chapters  in  which  the  fact  was  made 
apparent  that  when  a  people  is  once  inspired  Ijy  the  desire 
to  achieve  industrial  independence  there  are  no  obstacles  in 
the  way  of  their  doing  so,  provided  the  natural  resources 
exist.  The  lack  of  capital  and  skill  may  be  overcome  with 
comparative  ease.  The  experience  of  the  United  States 
proves  this,  and  Russia  is  to-day  furnishing  an  illustra- 
tion of  what  can  be  accomplished  when  the  determination 
is  reached  to  develop  latent  resources.  In  the  passages 
devoted  to  describing  the  effects  of  the  introduction  of 
labor-saving  machinery  we  also  had  a  glimpse  of  the  pos- 
sibilities. It  was  shown  that  the  ability  to  manipulate  com- 
plicated machines  could  easily  be  acquired  by  working- 
men  of  ordinary  capacity,  and  the  natural  inference  to  be 
drawn  from  this  is  that  there  are  absolutely  no  bounds 
to  the  productivity  of  such  machinery  except  the  inability 
of  the  world  to  effectively  consume. 


296         PROTECTION   AND   PROGRESS 

This  is  a  phase  of  the  question  which  has  not  received 
the  attention  it  deserves.  The  professional  economist  has- 
assumed,  in  spite  of  the  constant  practical  denials  of  his 
theory,  that  such  a  thing  as  overproduction  is  impossible. 
It  may  be  admitted  that  there  is  something  incongruous 
in  the  statement  that  there  is  an  almost  constant  overpro- 
duction of  manufactured  articles  concurrent  with  a  cry- 
ing demand  for  them  which  is  never  satisfied.  But  with 
this  unsatisfied  demand  we  have  nothing  to  do  at  present, 
and  so  far  as  can  be  seen  the  practical  economist  will  not 
have  much  to  do  with  it  until  the  competitive  system  is 
completely  overturned.  We  are  now  dealing  solely  with 
the  phenomenon  which  Professor  Rogers  considered  in  a 
lecture  nearly  ten  years  ago,  when  he  said:  "Supply  may 
be  in  excess  of  demand,  and  prices  may  fall  below  what  is 
remunerative.  Such  a  state  of  things,  if  we  can  believe  the 
complaints  which  have  been  made,  and  were  loud  and  per- 
sistent enough  to  secure  a  hearing  from  a  Royal  Commis- 
sion, was  characteristic  of  British  production  and  trade 
pretty  universally  up  to  about  a  year  ago  (1888)  and 
induced  many  persons  to  seriously  doubt  whether  the  spec- 
ulative economists  were,  after  all,  in  the  right  when  they 
repudiated  the  possibility  of  a  general  glut.  *  *  *  It 
seems  that  the  beneficent  operation  of  competition  is  at 
an  end,  and  that  if  the  existing  body  of  producers  is  to 
exist  some  other  expedient  is  to  be  adopted  by  which  a 
fair  profit  can  be  gained  by  a  national  industry."* 

Since  these  words  were  uttered  by  Professor  Rogers 
there  has  been  no  improvement  in  the  situation.  The  ten- 
dency which  he  noted  in  Great  Britain  has  manifested  itself 
in  a  country  which  has  scarcely  more  than  entered  on  its 
career  of  manufacturing  industry  and  which  has  possibili- 
ties  in   the   form   of   undeveloped   resources    immeasurably 


♦Rogers,  Industrial  and  Commercial  History  of  England,  p.  377. 


CONSUMPTION  29; 

surpassing  those  of  the  hitherto  most  successful  commercial 
nation  of  modern  times.  During  the  years  between  1892 
and  1897  the  United  States  suffered  as  severely  from  the 
effects  of  production  in  excess  of  the  ability  of  its  people 
to  effectively  consume  as  Great  Britain.  There  was  no 
increase  of  production  during  these  years ;  on  the  con- 
trary, there  was  a  striking  diminution.  The  output  of  pig 
iron,  which  had  reached  9,157,000  tons  in  1892,  fell  to 
6,657,388  tons  in  1894  and  in  1896  was  only  8,623,127.  The 
iron  industry  fairly  reflected  the  condition  of  American 
manufactures  during  the  period  in  question.  They  all 
showed  a  marked  reduction  of  output  due  to  a  declining 
demand. 

To  examine  the  theories  put  forth  in  explanation  of 
the  diminished  consumption  would  cause  a  digression  which 
would  divert  attention  from  the  point  which  the  writer 
seeks  to  emphasize — that  under  existing  conditions  of  dis- 
tribution the  facilities  for  manufacturing  are  enormously 
in  excess  of  prospective  effective  consumption,  and  that 
these  facilities  are  constantly  being  added  to  without  any 
corresponding  effort  to  enlarge  the  effective  demand.  Re- 
curring to  our  illustration,  we  find  that  the  production  of 
pig  iron,  which  dropped  to  6,657,388  tons  in  1894,  in  1897 
rose  to  9,652,680  tons,  and  it  is  confidently  believed  at 
the  time  of  this  writing  that  the  output  of  the  United  States 
in  1898  will  reach  and  perhaps  exceed  12,000,000  tons. 
The  only  inference  to  be  drawn  from  this  sudden  expan- 
sion is  that  the  ability  of  the  United  States  to  supply  the 
demand  of  its  people  for  iron  has  reached  the  surplus  stage, 
and  when  we  examine  the  table  of  exports  we  find  the  infer- 
ence supported  by  figures  showing  that  this  country  has  iron 
to  spare  in  abundance. 

But  the  United  States  is  not  the  only  country  posses- 
sing abundant  mineral  resources  and  a  disposition  to  develop 
them.  An  English  writer,  in  a  recent  discussion  of  the 
subject  of  industrial  supremacy,  answering  a  question  pro- 


298         PROTECTION  AND  PROGRESS 

pounded  by  himself,  said:  "Is  it  probable  that  the  United 
States  are  possessed  of  natural  resources  so  exceptional 
*  *  *  that  they  are  not  likely  to  be  seriously  threatened 
by  the  competition  of  other  and  newer  countries  in  the 
not  distant  future?  My  own  investigations  lead  me  to  the 
conclusions  that  no  single  country  has  thus  been  endowed 
by  nature  and  that  the  mineral  wealth  of  the  world  is 
distributed  over  so  wide  an  area  that  no  single  country 
can  hope  to  enjoy  supremacy  in  so  widely  diffused  an  in- 
dustry as  that  of  the  manufacture  of  iron  and  steel  for  a 
long  period — long,  that  is,  as  periods  go  in  the  history 
of  the  world.  It  may  be  that  to-day  the  industrial  situa- 
tion of  the  United  States,  or  of  the  United  Kingdom,  looks 
impregnable,  but  it  is  always  much  less  so  than  it  appears 
to  be. 

"It  is  not  many  years  since  I  was  confronted  with  fig- 
ures which  appeared  to  prove  with  convincing  relevancy 
that  the  cost  of  the  production  of  iron  in  Nova  Scotia  would 
be  less  than  on  any  other  part  of  the  American  continent. 
I  enjoy  a  fairly  considerable  acquaintance  with  the  mineral 
resources  of  New  South  Wales  "*  *  *  and  it  would  not 
surprise  me  to  learn  that,  with  the  iron  ore  resources  of 
Carlo's  Gap,  Picton  and  other  parts  of  the  colony,  and  the 
large  coal  fields  near  at  hand,  iron  could  be  manufactured 
in  that  distant  colony  as  cheaply  as  in  any  part  of  the 
world.  Then,  again,  everyone  is  looking  forward  to  the 
possibility  of  a  considerable  development  in  the  not  dis- 
tant future  of  the  mineral  resources  of  British  India,  of 
China,  of  Siberia  and  of  Japan.  So  far  as  India  is  con- 
cerned, I  have  examined  a  number  of  volumes  of  memoirs 
of  the  geological  survey  of  the  empire  and  cannot  fail 
to  be  struck  with  the  evidence  which  they  afiford  of  vast 
m.ineral  wealth,  alike  in  coal  and  in  iron  ores,  scattered 
with  bountiful  profusion  over  very  wide  areas.  The  de- 
mand for  metals  is  not  yet  large  enough  in  India  to  justify 
a  large  metallurgical  industry,  nor  is  it  by  any  means  cer- 


CONSUMPTION  299 

tain  that  such  a  demand  will  speedily  come  about ;  but  that 
under  suitable  conditions  India  could  manufacture  iron 
and  steel  cheaply  scarcely  admits  of  a  doubt.  Of  China 
and  Japan  but  little  need  be  said,  because,  while  both  coun- 
tries are  at  the  present  time  engaged  in  building  iron  and 
steel  works,  no  export  trade  from  either  is  likely  to  be 
developed  for  many  years. 

"Matters,  however,  are  much  more  likely  to  ripen  into 
a  competitive  trade  in  some  European  countries,  and  notably 
in  Spain  and  Russia.  *  *  *  I  had  the  pleasure  of 
going  over  a  number  of  Spanish  iron  and  steel  works 
only  eighteen  months  ago,  and  I  confess  to  having  been 
surprised  at  their  mechanical  and  economic  circumstances. 
If  Spanish  coke  of  good  quality  can  be  delivered  at  either 
Bilbao,  Aries  or  Rinaldes  at  sixteen  shillings  per  ton  I 
can  conceive  of  no  good  reason  why  pig  iron,  both  hema- 
tite and  basic,  should  not  be  made  for  twenty-eight  shilHngs 
a  ton^  at  which  rate  it  would  be  the  cheapest  pig  iron  in 
Europe,  except  that  produced,  on  a  comparatively  small 
scale,  under  very  exceptional  circumstances,  by  the  Peine 
Iron  Company  near  Hanover,  Germany. 

"So  far  as  Russia  is  concerned,  it  seems  almost  absurd 
to  speak  of  an  empire  that  is  now  importing  about  three- 
quarters  of  a  million  tons  of  iron  and  steel  annually  from 
other  countries  as  likely  to  enter  the  ranks  of  competing 
countries  within  a  period  of  time  worth  taking  account  of. 
As  a  matter  of  fact,  however.  Russia  may  be  much  nearer 
to  the  attainment  of  this  position  than  is  commonly  sup- 
posed. One  can  onlv  q"uess  at  some  of  the  geographical 
and  economic  results  that  are  likely  to  follow  upon  the 
opening  of  the  trans-Siberian  railway.  It  is  well  known 
that  Siberia  is  a  country  rich  in  minerals  of  every  kind, 
and  although  the  present  population  is  almost  ridiculously 
small  for  such  a  country  *  *  *  still  the  advent  of  rail- 
way facilities  must  mal-e  a  momentous  change  in  the  rela- 
tions of  Orient  and  ( )rcident.     Leaving  this  for  the  mo- 


300         PROTECTION  AND  PROGRESS 

mcnt,  however,  I  happen  to  be  aware  of  a  project  now  on 
the  tapis  for  erecting  large  iron  and  steel  works  between 
the  Caspian  and  Black  seas,  which  are  intended  to  supply 
the  requirements  of  a  large  part  of  Turkey  and  Persia, 
as  well  as  of  a  certain  area  in  Russian  territory  now  insuf- 
ficiently provided  for;  and  in  one  or  two  other  centers  ag- 
gressive ideas  begin  to  be  entertained."* 

These  observations,  proceeding,  as  they  do,  from  one 
of  the  best  modern  authorities,  a  man  of  large  practical 
experience  and  a  free  trader,  convey  the  impression  that 
the  future  development  of  the  iron  and  steel  industry  may 
be  expected  to  surpass  that  of  the  past.  In  summing  up, 
Mr.  Jeans  says  this  will  undoubtedly  be  the  case.  He  adds : 
"The  present  annual  output  of  pig  iron  throughout  the 
world  is  about  32,000,000  tons;  in  1880  it  was  only  about 
18,000,000  tons;  in  1870  only  12,000,000  tons,  and  in  1850 
less  than  5,000,000  tons.  If  the  same  rate  of  increase  is 
ma-'ntained  in  the  future,  our  annual  consumption  of  pig 
iron  in  191 6  will  be  46,000,000  tons  and  in  1934 — a  date 
within  the  probable  existence  of  most  of  the  young  engi- 
neers and  metallurgists  now  living — it  will  be  more  than 
60,000,000."  t 

It  is  well  to  proceed  with  caution  in  expressing  an 
opinion  of  the  possibilities  of  the  future,  but  it  is  not  un- 
reasonable to  assume  that  the  consumptive  demand  of  the 
world  will  not  increase  in  any  such  ratio  as  that  suggested 
by  Jeans.  While  iron  and  steel  are  not  entirely  imperish- 
able, their  durability  is  sufficiently  great  to  warrant  our 
supposing  that  when  the  world  is  measurably  well  sup- 
plied with  railroads  and  with  structures  largely  composed 
of  iron  and  steel  the  demand  for  these  metals  will  to  some 
extent  be  abated.     In  the  United  States  the  requirements 


*Jeans,   The   Shifting  Site  of  National   Industrial   Supremacy,    En- 
gineering Magazine,  April,   1898. 
t  Ibid. 


CONSUMPTION  301 

of  the  railroads  have  been  as  high  as  2,271,471  tons  of 
steel  rails  in  a  single  year,  but  this  demand  was  largely 
due  to  new  track-laying.  In  subsequent  years,  although 
construction  was  not  entirely  suspended,  the  demand  for 
rails  fell  off  greatly.  In  1893,  although  nearly  two  thou- 
sand miles  of  new  tracks  were  laid,  the  consumption  of  rails 
was  only  1,119,813  tons.  It  is  very  probable  that  many 
thousand  miles  of  additional  road  will  be  added  to  the 
existing  railway  system  of  the  United  States  between  now 
and  1934,  but  it  is  inconceivable  that  the  additions  will  be 
as  large  as  those  made  during  the  thirty-six  years  preceding 
1898.  In  1862  the  railroad  mileage  in  the  United  States 
was  less  than  28,000  miles ;  at  the  end  of  1895  it  was  179,162 
miles.  Does  anyone  fancy  that  the  future  will  witness 
an  average  construction  in  this  country  of  nearly  5,000 
miles  annually?  Hardly.  If  one-half  that  much  track  is 
added  during  the  coming  thirty-six  years  we  shall  com- 
mit the  blunder  of  providing  ourselves  with  unnecessary 
facilities,  which  will  add  to  the  difficulties  of  an  already 
serious  problem  and  greatly  increase  the  cost  of  transpor- 
tation. 

When  we  inquire  regarding  the  possible  demands  for 
iron  and  steel  for  structural  purposes  the  idea  that  it  can- 
not increase  in  the  progressive  fashion  Mr.  Jeans  suggests 
is  forced  upon  us.  At  present  the  requirement  for  tall 
buildings  is  tremendous,  but  there  is  already  noticeable  a 
tendency  to  discuss  the  question  of.  Where  are  all  the 
tenants  to  come  from  to  fill  the  "sky  scrapers"  added  each 
year  in  our  large  cities?  In  New  York  and  Chicago  the 
completion  of  a  new  tall  building  with  slightly  better  ac- 
commodations than  those  already  in  existence  is  the  sig- 
nal for  tenants  to  desert  the  less  modern  structure.  The 
competition  has  become  so  great  that  in  spite  of  the  lim- 
ited area  of  New  York  City  there  is  no  increase  in  ofifice 
rents  and  capitalists  are  complaining  that  they  are  not 
receiving  adequate  returns  on  their  investments  in  prop- 


302         PROTECTION   AND   PROGRESS 

erty  of  this  character.  So,  on  the  whole,  we  may  con- 
clude that  while  many  tall  structures  will  be  added  to 
those  already  in  existence  the  addition  will  not  be  great 
enough  to  help  swell  the  consumptive  demand  for  iron 
and  steel  to  such  figures  as  would  be  required  to  bring  our 
proportion  of  the  increase  of  the  world's  consumption  up 
to  the  mark  indicated  by  Jeans.  As  in  the  case  of  rail- 
roads, in  which  the  demand  for  rails  diminishes  as  the  coun- 
try is  supplied  with  roads,  so  must  the  demand  for  steel 
structural  purposes  grow  less  when  the  cities  of  the  coun- 
try are  well  provided  with  large  structures  fot  office  and 
other  purposes,  for  the  fact  must  not  be  lost  sight  of 
that  a  well  constucted  edifice  with  a  steel  frame  is  likely 
to  endure  a  hundred  years  or  more ;  perhaps  the  longevity 
of  such  buildings  may  rival  that  of  the  best  structural  sur- 
vivals from  the  Middle  Ages. 

There  are  other  directions  in  which  the  use  of  steel  and 
iron  may  be  increased,  notably  in  the  construction  of  bridges 
and  in  the  manufacture  of  pipes  for  conveying  gas  and 
water  and  oil  and  in  shipbuilding.  That  the  demand  from 
these  sources  will  be  considerably  enlarged  in  the  United 
States  and  in  other  countries  in  the  future  cannot  be 
doubted,  but  it  is  certainly  questionable  whether  the  increase 
in  this  particular  will  reach  the  colossal  proportions  it 
would  have  to  in  order  to  help  create  an  annual  consump- 
tion of  60,000,000  tons  of  iron  and  steel.  A  modern  steel 
bridge,  if  properly  constructed,  will  endure  for  many  years ; 
so,  too,  will  pipe  lines ;  therefore,  when  the  needs  of  a  coun- 
try are  once  fairly  supplied  in  these  particulars  the  demand 
for  material  for  new  construction  must  abate.  In  the  case 
of  steel  ships  there  is  no  probability  of  any  extraordinary 
expansion  of  demand.  The  signs  all  plainly  point  to  a 
redistribution  of  the  ocean  carrying  trade  of  the  world 
rather  than  to  simultaneous  development  of  the  shipping 
industry  in  every  country.  It  is  clearly  apparent  that  the 
business  of  shipbuilding  is  now  overdone.     That  is  shown 


CONSUMPTION  303 

by  the  fact  that  the  carrying  industry,  while  its  aggregate 
earnings  are  enormous,  is  not  a  very  profitable  one.  In 
some  countries  it  can  only  be  kept  alive  by  extending  boun- 
ties to  shipowners  for  maintaining  and  running  vessels  which 
could  easily  be  dispensed  with.  In  order  that  the  demand 
for  ships  should  be  greatly  enlarged  it  would  be  necessary 
to  still  further  extend  the  wasteful  system  of  unnecessary 
hauling  now  in  vogue,  but  there  is  no  probability  that  that 
will  be  done.  The  system  of  protection,  as  it  becomes  bet- 
ter understood  and  is  more  generally  practiced,  will  reduce 
this  waste  to  a  minimum.  Mr.  Jeans'  observations  on  the 
wide  diffusion  of  the  metals  pertinently  suggests  what  may 
happen  when  the  owners  of  some  of  these  at  present  unde- 
veloped resources  conclude  to  develop  them  for  themselves 
rather  than  remain  dependent  on  foreigners  for  supplies 
which  they  might  obtain  at  home.  In  the  face  of  such  devel- 
opment there  may  be  an  increase  of  external  commerce,  but 
it  is  inconceivable  that  it  should  be  relatively  as  great  as 
that  hitherto  noted  which  has  been  largely  due  to  a  prac- 
tice analogous  to  "hauling  coals  to  Newcastle."  A  rational 
exchange  of  non-competing  products  will  demand  fewer 
ships  than  are  now  used  in  the  unnecessary  transportation 
to  and  fro  of  raw  materials  and  finished  articles  and  for 
the  moving  of  the  vast  quantities  of  coal  now  required  to 
supply  vessels  engaged  in  an  entirely  superfluous  trade. 

But,  apart  from  these  assumptions,  which  may  prove 
erroneous  because  too  much  dependence  is  placed  upon 
the  belief  that  the  disposition  to  eliminate  wastefulness  in 
transportation  will  take  a  practical  form  when  its  evils 
are  clearly  apprehended,  it  may  be  argued  that  even  should 
there  be  such  a  developm.ent  of  demand  for  the  products  of 
iron  as  the  production  annually  of  60,000,000  tons  implies, 
the  world  will,  for  a  time  at  least,  be  abundantly  able  to 
provide  such  a  quantity,  and  the  indications  are  that  the 
ability  to  supply  will  in  the  future,  as  in  the  past,  constantly 
exceed  the  effective  consumptive  demand.     Such  a  prospect 


304         PROTECTION   AND   PROGRESS 

is  not  calculated  to  fill  with  hope  those  who  realize  that 
the  modern  system  of  production  is  conducive  to  the  cre- 
ation of  a  vast  social  wreckage,  and  it  will  encourage  those 
who  hold  the  opinion  that  unrestrained  competition  is  an 
evil  to  persevere  in  their  determination  to  restrict  its  area, 
and  thus  in  a  measure  abate  it. 

Those  who  adhere  to  the^  view  that  the  world  is  not 
benefited  by  absolute  free  trade  will  hardly  abandon  it 
when  they  realize  what  may  happen  from  the  extension 
of  a  system  which  has  been  introduced  into  Germany  and 
which  meets  with  great  favor  in  this  country.  It  is  not 
novel,  for,  as  we  have  already  seen,  the  method  was  advo- 
cated and  practiced  with  marked  success  by  Great  Britain 
during  the  first  half  of  the  present  century.  Reference  is 
made  to  the  practice  of  unloading  upon  rivals  the  surplus 
products  of  manufactures  at  a  lower  price  than  that  which 
rules  in  the  home  market.  A  double  purpose  is  accom- 
plished when  this  is  done.  The  ruinous  effects  of  exces- 
sive internal  competition  are  avoided,  and  the  rival  for- 
eign manufacturer  is  obliged  to  produce  at  a  loss  or  retire 
from  the  contest  unless  the  artificial  barrier  of  protection 
is  interposed.  A  successful  resort  to  this  plan  by  the 
British  early  in  the  present  century  forced  the  Americans, 
who  were  also  inclined  by  the  desire  to  promote  the  devel- 
opment of  their  own  resources  to  impose  high  tariffs.  The 
stimulus  afforded  by  a  protection  which  was  afterward 
maintained  with  more  or  less  effectiveness  has  called  into 
existence  vast  manufacturing  plants  whose  productive  ca- 
pacity now  exceeds  the  effective  demand.  A  similar  con- 
dition of  affairs  exists  in  Germany  and  it  has  been  brought 
about  in  nearly  the  same  fashion.  Both  countries  are  now 
producing  in  many  lines  considerably  in  excess  of  their 
needs  and  they  are  imitating  the  example  set  by  Great 
Britain  when  its  manufacturers  imagined  that  they  could 
retain  the  control  of  the  trade  of  the  world. 

Mr.  Jeans  has  described  what  is  being  done  along  these 


CONSUMPTION  305 

lines  and  taunts  his  countrymen  witli  their  inability  to  re- 
sort to  the  same  course.  His  language  has  been  quoted 
in  another  place,  but  it  will  bear  repetition  here,  as  it  empha- 
sizes the  point  which  protectionists  always  keep  in  mind 
— that  the  tendency  of  the  world  under  present  conditions 
is  to  overproduce,  and  that  the  national  welfare  demands 
that  steps  be  taken  to  guard  working  people  against  the 
encroachments  of  an  unfair  competition.  Mr.  Jeans  says: 
"The  customs  duties  levied  on  the  imports  into  Germany, 
for  example,  protect  the  German  manufacturer  from  compe- 
tition in  his  own  market,  so  that  he  can  always  depend  upon 
securing  within  the  limits  thereby  prescribed  a  satisfactory 
price  from  his  home  customers.  *  *  *  fhe  home  busi- 
ness, in  short,  is  made  so  profitable  that  manufacturers  can 
afford,  if  necessary,  to  lose  on  export  orders,  which  they 
often  do,  for  the  double  purpose  of  building  up  trade  and 
keeping  their  manufacturing  establishments  and  their  work- 
men fully  employed.  *  *  *  Qf  course,  in  so  far  as 
Germany,  or  any  other  country,  sells  in  neutral  markets 
at  less  than  cost  it  is  not  fair  competition.  It  could  be 
effectively  met  only  by  the  adoption  elsewhere  of  a  simi- 
lar economic  system,  which,  however,  cannot  be  looked 
for  in  England,  wedded  as  she  is  to  free  trade,  whatever 
consequences  that  system  may  involve."* 

Mr.  Jeans  treats  this  movement  of  the  manufacturers 
of  Germany  and  the  United  States  as  a  novel  and  unfair 
mode  of  competition,  but  we  have  seen  that  as  early  as 
1816  Lord  Brougham  said:  "It  is  well  worth  while  to 
incur  loss  upon  the  first  importation  in  order,  by  the  glut, 
to  stifle  in  the  cradle  those  rising  manufactures  in  the  United 
States  which  the  war  had  forced  into  existence,  contrary 
to  the  natural  course  of  things.  Eighteen  millions'  worth 
of  goods,  I  believe,  were  exported  in  one  year,  and  for 
a  considerable  part  of  this  no  returns  have  been  received; 


*Jeans,    Supremacy    in    the    Iron    Market.    Engineering    Magazine, 
December,    1807. 
20 


o 


06         PROTECTION   AND   PROGRESS 


while  still  more  of  it  must  have  been  selling  at  a  very 
scanty  profit."* 

There  is  no  essential  difference  in  the  plan  pursued  by 
the  German  and  American  manufacturers  of  to-day  and  that 
adopted  by  the  British  manufacturer  in  the  early  part  of 
the  present  century  to  stifle  the  growing  industries  of  the 
United  States.  When  Lord  Brougham  delivered  his  speech 
the  factories  of  Great  Britain  were  turning  out  more  goods 
than  the  British  people  could  profitably  consume,  therefore 
they  resorted  to  the  expedient  of  unloading  their  surplus 
upon  foreigners,  the  object  being  to  keep  up  prices  in  the 
home  market  and,  at  the  same  time,  by  underselling  would- 
be  rivals,  make  it  impossible  for  them  to  compete. 

Mr.  Jeans  characterizes  this  unloading  of  surplus  stocks 
as  unfair,  and  so  it  is ;  but  it  would  puzzle  him  to  give  many 
instances  of  fairness  in  commercial  competition.  There  is 
no  attempt,  so  far  as  we  can  see,  to  conduct  industrial 
contests  fairly,  and  it  is  misleading  to  discuss  the  matter 
as  though  such  a  spirit  prevailed.  When  we  speak  of  a 
fair  race  between  men  or  horses  we  have  in  mind  equal 
conditions.  If  equality  does  not  exist  primarily  pains  are 
taken  to  bring  it  about.  No  one  would  say  that  a  race 
between  two  men  in  which  one  had  several  hundred  yards 
the  start  of  the  other  was  a  fair  one,  or  that  a  contest  be- 
between  a  rider  on  a  bicycle  and  a  man  afoot  displayed  the 
abilities  of  the  contestants.  But  there  are  writers,  and  Mr. 
Jeans  appears  to  be  one  of  them,  who  do  not  hesitate  in 
treating  the  subject  of  industrial  competition  to  assume 
that  laisses  faire  makes  everything  even.  If  there  is  no 
government  interference,  say  these  economists,  then  all  is 
fair.  If  there  is  free  trade  that  settles  the  matter.  Then, 
acording  to  their  theory,  everyone  has  a  show,  and  those 
who  lag  in  the  race  have  only  themselves  to  blame.  They 
disregard  the  advantages  which  the  possession  of  capital  and 

*Brougham,  Speech  on  the  Signing  of  the  Treaty  of  Peace,  1815. 


CONSUMPTION  307 

acquired  skill  confer  and  assume  that  those  who  have  neither 
the  one  nor  the  other  deserve  to  be  relegated  to  the  limbo 
of  eternal  dependence.  Their  motto  is  "To  him  that  hath 
shall  be  given,"  and  they  resent  all  attempts  on  the  part 
of  those  who  seek  to  emancipate  themselves  from  depend- 
ence as  violations  of  natural  laws,  as  though  the  economy 
of  nature  contemplated  the  monopoly  by  the  few  of  all 
the  good  things  of  the  earth. 

Such  puerile  views  could  not  be  acepted  by  people  with 
a  capacity  for  improvement,  and  as  this  capacity  exists 
throughout  the  whole  world,  even  among  the  nations  in 
which  a  temporary  arrest  of  development  has  ocurred,  the 
narrow  and  selfish  policy  of  Cobdenism  has  made  no  head- 
way. Instead,  it  is  antagonized  by  a  more  enlightened 
kind  of  selfishness  which  teaches  that  it  is  the  first  duty 
of  a  people  to  develop  their  faculties  and  resources,  and 
that  it  is  worth  while  to  make  great  sacrifices  to  attain  a 
position  of  commercial  and  manufacturing  independence. 
Adherence  to  a  policy  of  this  kind  has  resulted  in  the  de- 
struction of  the  Cobdenistic  idea  that  one  nation  could  be 
the  workshop  of  the  world,  and  is  rapidly  converting  the 
world  into  one  vast  workshop. 

The  outcome  must  prove  beneficial  to  mankind,  but  it 
will  bring  new  problems  for  solution.  If  one  or  two  na- 
tions with  a  practical  manufacturing  monopoly  found  them- 
selves capable  of  producing  in  excess  of  the  needs  of  the 
world  what  will  happen  when  many  peoples,  with  infinitely 
greater  resources,  attain  a  high  state  of  industrial  efficiency? 
If  Great  Britain  found  it  difficult  during  the  period  when 
she  controlled  the  iron  markets  of  the  world  to  secure  enough 
customers  to  consume  her  products  what  will  result  when 
Germany,  Russia,  the  United  States  and  other  countries 
whose  possibilities  have  been  outlined  by  Mr.  Jeans  pro- 
duce surpluses  as  great  as  those  of  the  British  and  begin 
seeking  customers  for  them?  Some  signs  of  the  trouble 
likely  to  be  experienced  are  already  perceived,   and  they 


3o8         PROTECTION  AND  PROGRESS 

do  not  encourage  the  hope  that  the  consumptive  ability 
of  mankind  will  keep  pace  with  increased  powers  of  pro- 
duction. On  the  contrary,  there  is  overwhelming  evidence 
in  the  shape  of  falling  prices  and  carry-over  stocks  that  the 
evil  of  overproduction  will  be  greatly  intensified,  and  that 
in  the  eager  struggle  more  and  more  people  will  be  drawn 
into  the  vortex  described  by  Giffen  as  the  social  wreckage 
of  the  world. 

We  have  taken  the  expansion  of  the  iron  and  steel  indus- 
try for  our  text  because  the  progress  made  in  its  develop- 
ment conveys  an  unexaggerated  idea  of  the  possibilities 
which  may  follow  the  general  dififusion  of  mechanical  skill. 
In  sketching  the  advances  made  in  this  particular  branch 
of  manufacture  during  the  past  thirty-six  years,  and  in 
endeavoring  to  estimate  the  consequences  of  an  equal  devel- 
opment (luring  the  coming  thirty-six  years,  we  have  by 
no  means  emphasized  as  fully  as  we  might  what  must  hap- 
pen in  the  not  very  remote  future  if  the  capacity  of  man 
to  produce  is  developed  to  its  fullest  extent  without  finding 
some  better  method  of  adjusting  consumption  to  produc- 
tion than  that  which  competition  is  supposed  to  effect.  To 
bring  all  the  possibilities  into  plain  relief  we  must  call 
attention  to  the  fact  that  with  the  assistance  of  improved 
machinery  sufficiently  large  supplies  of  some  articles  are 
now  produced  in  a  few  days  to  meet  the  world's  demands 
for  a  year  or  even  for  a  longer  period. 

In  1895  a  writer  discussing  the  wage  question  asserted 
that  "Pennsylvania  had  capacity  enough  in  her  glass  works 
to  supply  the  total  needs  of  the  United  States."  The  sig- 
nificance of  the  statement  is  heightened  when  it  is  added 
that  the  glass  industry  of  the  United  States  is  by  no  means 
confined  to  Pennsylvania,  but  that  there  are  other  centers 
of  production  which,  uniting  with  those  of  the  Keystone 
State,  could  probably  in  three  months  provide  all  the  glass 
that  could  be  profitably  used  in  this  country  in  a  year. 
In  a  description  of  the  growth  of  the  electrical  manufac- 


CONSUMPTION  309 

turing  industry  in  the  United  States  we  find  it  stated  that 
"within  the  past  fifteen  years  (1880-1895)  some  seventy- 
five  factories  have  been  started  to  supply  the  annual  con- 
sumption of  200,000,000  carbon  points,  and  that  their 
capacity  has  already  reached  three  times  that  figure.  There 
are  to-day  (1895)  twenty  factories  in  the  world  with  a 
capacity  of  350,000,000  per  annum."* 

This  rapid  expansion  would  undoubtedly  have  been 
greatly  exceeded  were  it  not  for  the  fact  that  the  patent 
laws  operate  as  a  hindrance.  There  were  about  10,000 
spindles  employed  in  the  cordage  industry  in  the  United 
States  in  1895,  two-thirds  of  which  were  ample  to  supply 
the  wants  of  the  country.  In  i860  a  machine  was  invented 
in  the  United  States  for  sewing  soles  on  shoes ;  with  its  aid 
a  single  operator  can  sew  500  or  600  soles  a  day.  In  1894 
there  were  4,000  of  these  machines  at  work  and  their  prod- 
uct was  120,000,000  pairs.  The  machine  is  patented  and  its 
use  is  comparatively  restricted.  What  will  happen  when  it 
is  freely  used? 

The  Textile  Mercury,  the  official  organ  of  the  English 
cotton  employers,  in  an  article  dealing  with  the  wage  ques- 
tion in  the  cotton  industry  (November,  1897)  called  atten- 
tion to  the  grave  position  of  the  trade  and  asked  the  oper- 
atives to  consider  facts  such  as  these :  "While  the  cotton 
industry  throughout  the  world  is  extending  rapidly,  the 
British  section  of  it  has  commenced  to  decline,  although 
the  population  dependent  upon  it  is  increasing.  The  ex- 
ports of  machinery  have  been  steadily  increasing  for  years. 
This  machinery  is  mainly  going  to  India,  China  and  Japan, 
where  women  work  for  6d  or  yd  per  day  and  men  at  9d 
to  Tod  per  day.  They  can  also  work  much  longer  hours, 
and  in  many  cases  the  mills  are  working  night  and  day 
with  relays.  Attention  is  also  drawn  to  the  fact  that  in 
addition  to  the  machinery  going  abroad  the  most  intelli- 

*Martin,  Article,  Electrical  Manufacturing  Interest  in  One  Hundred 
Years    of    American    Commerce. 


3IO         PROTECTION   AND   PROGRESS 

gent  Lancashire  operatives  are  now  going  out  to  Eastern 
countries,  India,  China  and  Japan,  to  teach  the  natives 
the  new  industry  and  to  manage  the  mills.  The  operatives, 
with  these  facts  before  them,  are  asked  'to  look  present 
facts  in  the  face,  bravely  encounter  them,  cease  to  harass 
the  trade  by  absurd  regulations  and  impositions,  accept  the 
reduction  of  wages  which  the  circumstances  demand,  and 
thus  retard  the  inevitable  surrender  of  the  industry  to  for- 
eign competition  sufficiently  long  to  give  the  capitalist  time 
to  work  out  his  investments  and  develop  something  new."* 
From  another  authority  we  derive  the  information  that  the 
cotton  textile  machinery  of  Great  Britain,  if  worked  to  its 
full  capacity,  would  be  able  to  supply  the  whole  world. 
We  know  that  the  production  in  this  country  of  similar  fab- 
rics is  so  much  in  excess  of  the  demand  that  the  mills  peri- 
odically shut  down  in  order  to  relieve  the  glutted  market, 
and  the  case  is  not  much  better  in  Germany  or  France. 

Wherever  we  turn  we  find  that  overproduction  soon  fol- 
lows the  development  of  manufacturing  industries.  In  all 
the  countries  where  the  modern  system  of  manufacturing  is 
established  the  people  have  acquired  the  ability  to  supply 
their  own  needs  and  are  obliged  to  turn  to  other  lands  for 
an  outlet  for  their  surplus  products,  but  the  prospects  of 
relief  are  not  bright.  A  very  few  years  ago,  when  the 
Orient  was  forcibly  opened  to  trade  with  the  Western  world, 
it  was  imagined  that  a  new  and  illimitable  market  had  been 
found,  but  recent  events  have  greatly  modified  this  opin- 
ion, and  the  prospects  of  any  considerable  extension  of 
the  Oriental  consumption  of  the  products  of  Western  fac- 
tories are  not  now  regarded  as  very  assuring. 

In  the  face  of  evidence  of  this  kind  the  people  of  pro- 
tective countries  cannot  help  regarding  with  suspicion  the 
attempts  of  economists  who  seek  to  convey  the  idea  that 
production   is   satisfactorily  adjusting  itself  to  the  ability 


*Bradstreet's,  The  English  Cotton  Trade,  November  15,  1897. 


CONSUMPTION  311 

to  consume.  A  recent  writer  tells  us  that  "the  recurrent 
exercise  of  the  choice  of  the  capitahst"  is,  on  the  whole, 
beneficial,  and  that  "changes  in  the  direction  of  greater  or 
less  expenditure,  or  greater  or  less  (usually  greater)  ac- 
cumulations, come  slowly  and  gradually.  The  motive  power 
which  thus  drives  and  controls  the  apparatus  of  capitalistic 
production  works  in  the  main  so  steadily  that  we  forget 
that  it  consists  of  the  collected  volition  of  hosts  of  individ- 
uals, each  and  all  of  whom  are  free  to  do  as  they  will 
with  their  own."*  This  reads  smoothly,  but  we  know  that 
it  is  not  true.  There  is  no  more  ground  for  the  assumption 
that  the  business  of  production  goes  on  steadily  than  there 
is  for  the  writer's  statement  "that  the  machinery  of  pro- 
duction at  any  given  time  is  arranged  for  the  supply  of 
the  habitual  and  anticipated  wants  of  the  community,"  or 
that  "the  pig  iron  maker  has  a  reasonable  faith  that  his 
iron  will  be  bought  by  the  maker  of  machinery,  and  he 
again  that  his  machinery  will  be  bought  by  the  person  who 
means  to  use  it  in  making  one  product  or  another."t 

These  assumptions  are  not  borne  out  by  experience,  and 
there  is  no  profit  to  be  derived  from  the  acceptance  of  such 
theories.  We  know  that  there  are  periods  of  so-called 
depression  in  which  the  producer  is  harassed  with  fears 
of  the  consequences  of  excessive  production,  and  that  they 
recur  so  frequently  that  attempts  are  made  to  formulate 
theories  to  explain  them.  Within  the  past  quarter  of  a 
century  the  years  of  overproduction  have  exceeded  those  in 
which  the  effective  demand  for  products  even  remotely 
approached  the  ability  to  produce.  To  urge  that  because 
at  the  end  of  a  long  period  the  world's  wealth  and  produc- 
tive and  consumptive  capacity  are  greater  than  at  the  be- 
ginning an  economic  system  has  proved  satisfactory,  even 
though  during  the  interval  many  depressions  have  occurred 
which  have  caused  great  distress  and  increased  the  social 


♦Taussig,  Wages  and  Capital,  p.  62. 
flbid,  p.   59. 


312         PROTFXTTON   AND   PROGRESS 

wreckage,  is  as  unreasonable  as  it  would  be  to  say  that 
an  engine  which  operates  the  pumps  used  for  the  purpose 
of  lifting  water  for  the  use  of  a  town  is  working  satis- 
factorily even  though  it  is  subject  to  frequent  breakdowns 
which  result  in  depriving  the  people  of  their  accustomed 
supply  of  water. 

The  advocates  of  protection  have  discovered  the  defects 
in  the  system  of  unrestrained  competition  here  referred  to 
and  seek  to  guard  against  them  as  much  as  possible.  They 
freely  admit  that  when  the  conditions  are  equal,  or  nearly 
so,  the  stimulus  of  competition  may  prove  advantageous, 
but  they  will  not  consent  to  the  proposition  that  it  is  bene- 
ficial under  all  circumstances.  They  are  not  disposed  to 
accept  the  doctrine  that  the  ability  to  manufacture  cheaply 
indicates  the  superiority  of  a  people.  They  recognize  that 
races  in  many  respects  more  backward  than  those  to  which 
they  belong  may,  by  the  aid  of  machinery  and  the  prac- 
tice of  economies  to  which  they  are  unaccustomed,  suc- 
ceed in  reducing  the  cost  of  production  to  an  infinitely  lower 
point  than  Western  peoples  have  dreamed  of,  and  they 
also  realize  that,  in  spite  of  the  contention  to  the  contrary, 
the  effect  of  competition  between  nations  with  established 
industries  tends  to  increase  the  "social  wreckage"  and  to 
make  the  condition  of  the  worker  more  and  more  precarious. 

Montesquieu  quotes  a  Chinese  saying  that  "an  Emperor 
of  the  Tangs  held  it  as  a  maxim  that  if  there  was  a  man 
who  did  not  work,  or  a  woman  that  was  idle,  somebody 
must  suffer  cold  or  hunger  in  the  empire."  Acting  "on  this 
principle,  the  Emperor  ordered  a  vast  number  of  the  mon- 
asteries of  the  Bonzes  to  be  destroyed."*  Modern  civiliza- 
tion has  changed  the  conditions  the  observation  of  whicfi 
called  forth  from  the  Chinese  Emperor  the  philosophic  re- 
flection quoted.  We  are  no  longer  confronted  with  the 
necessity  of  all  mankind  constantly  toiling  to  avert  the  dan- 
ger of  starvation.       Improved  machinery  has  effected  a 

♦Montesquieu,  Spirit  of  the  Laws,  Book  VII,  Chap.  VI, 


CONSUMPTION  313 

revolution  which  has  staggered  belief  in  the  soundness  of  a 
doctrine  which  has  for  its  basis  a  mathematical  truism.  We 
have  come  to  regard  with  contempt  the  effort  of  Malthus 
to  demonstrate  that  the  population  of  the  world  may  out- 
grow its  means  of  subsistence.  The  astounding  results 
achieved  in  the  field  of  agriculture  have  given  rise  to  the 
contrary  opinion  that  the  capability  of  the  earth  to  produce 
can  never  be  exceeded  by  the  demands  of  man.  A  writer 
whose  teachings  have  captivated  all  those  who  feel  that 
they  are  the  victims  of  an  unjust  distribution  says:  T 
go  to  the  heart  of  the  matter  in  saying  that  there  is  no  war- 
rant, either  in  experience  or  analogy,  for  the  assumption 
that  there  is  any  tendency  in  population  to  increase  faster 
than  subsistence.  The  facts  cited  (by  Malthus  and  his 
adherents)  simply  show  that  where,  owing  to  the  sparse- 
ness  of  population,  as  in  new  countries,  or  where,  owing 
to  the  unequal  distribution  of  wealth,  as  among  the  poorer 
classes  in  the  old  countries,  human  life  is  occupied  with 
the  physical  necessities  of  existence,  the  tendency  to  over- 
produce is  at  a  rate  which  would,  were  it  to  go  unchecked, 
some  time  exceed  subsistence.  But  it  is  not  a  legitimate 
inference  from  this  that  the  tendency  to  reproduce  would 
show  itself  in  the  same  force  where  population  was  suffi- 
ciently dense  and  wealth  distributed  with  sufficient  even- 
ness to  lift  a  whole  community  above  the  necessity  of  de- 
voting their  energies  to  a  struggle  for  mere  existence."* 

It  is  not  necessary  to  determine  whether  Malthus  was 
right  or  wrong.  No  practical  system  of  economics  needs 
to  take  into  consideration  a  contingency  which  improving 
methods  of  production  show  may  be  averted  for  centuries. 
The  application  of  the  remedies  proposed  by  those  who  have 
been  alarmed  by  the  possibility  of  the  world  becoming  over- 
crowded may  be  safely  left  to  the  future.  It  will  be  time 
enough  for  resorts  to  repression  of  population  when  the 

♦George,  Progress  and  Poverty,  Book  11,  Chap.  11. 


314         PROTECTION  AND  PROGRESS 

world  gives  signs  of  its  inability  to  provide  sustenance  for 
those  inhabiting  it.  If  the  pessimists  of  the  Malthusian 
school  based  their  advocacy  of  repressive  systems  upon 
the  theory  that  there  is  an  excess  of  population  which  is 
consuming  and  wasting  the  heritage  of  future  generations 
their  recommendations  might  be  entitled  to  respectful  con- 
sideration. But  their  fears  are  not  inspired  by  observa- 
tions of  this  character.  They  are  simply  the  result  of  a 
mathematical  demonstration  that  at  some  future  time  there 
will  be  more  people  than  food  to  feed  them.  If  the  dem- 
onstration is  correct  the  universe  will  have  to  bear  its  fate, 
but  in  the  meantime  it  will  be  wiser  to  study  the  oppor- 
tunities the  world  offers  to  subsist  immense  populations 
than  to  devise  plans  to  avoid  drawing  upon  these  resources. 
It  is  idle  to  brood  over  the  danger  of  insufficiency  when 
the  industrial  world  is  complaining  that  overproduction  in 
every  field  is  constantly  bringing  depression  and  disaster. 
"There  is  no  more  common  explanation  of  a  general 
depression  of  trade,"  says  a  recent  economic  writer,  "than 
that  of  general  overproduction.  The  fallacy — if  it  be  a 
fallacy — has  been  supported  by  distinguished  economists. 
Dr.  Chalmers  indicates  as  a  remedy  for  the  supposed  evil 
moral  restraint  in  the  pursuit  of  gain,  and  Sismondi  goes 
so  far  as  to  deprecate  the  extensive  adoption  of  machinery 
and  inventions."*  This  is  the  pass  to  which  we  have  been 
brought  by  unrestrained  competition.  Instead  of  recog- 
nizing the  true  cause  of  our  troubles  we  are  becoming  more 
and  more  inclined  to  the  acceptance  of  the  theory  that 
man  would  be  benefited  by  restricting  production.  The 
views  advanced  by  Dr.  Chalmers  are  shared  by  many  who 
are  unable  to  comprehend  that  the  successful  working  of 
competition  demands  that  there  should  be  no  restraint  placed 
upon  the  desire  for  gain,  and  that  the  penalty  for  impos- 
ing  such    restraint    would   be    industrial    stagnation.     But 

*Nicholson,  Principles  of  Political  Economy,  Vol.  II,  p.  83. 


CONSUMPTION  315 

the  opinion  of  Sismondi,  as  we  have  seen,  is  given "  practi- 
cal effect  by  the  world's  toilers,  who,  through  their  trades 
unions,  are  doing  all  in  their  power  to  limit  the  use  of  auto- 
matic machinery  in  order  to  prevent  the  displacement  of 
workingmen. 

The  men  who  write  books  on  political  economy  cannot 
hope  to  conceal  these  facts-  by  sophistries  or  elaborate 
calculations  showing  that  the  condition  of  the  workingman 
is  improving-.  The  latter  has  constantly  before  his  mind 
the  "social  wreckage"  which  Sir  Robert  Giffen  has  pic- 
tured, and  its  existence  is  a  constant  menace  to  him.  He 
does  not  know  how  soon  he  may  be  improved  out  of  his 
job,  and  thus  forced  out  of  the  "new  society"  by  some 
piece  of  improved  machinery  or  by  the  competition  of 
other  workingmen  who,  in  their  eager  struggle  for  exist- 
ence, are  ready  to  work  for  less  than  rivals.  But  above 
all  things  he  dreads  the  possible  consequences  of  the  intro- 
duction of  labor-saving  machinery  into  the  swarming  coun- 
tries which  are  now  to  some  extent  dependent  upon  the 
Western  world  for  supplies  of  manufactured  articles. 

Experience  and  observation  have  taught  the  workingman 
that  it  is  a  fallacy  to  assume  that  Orientals  cannot  learn 
to  operate  machinery.  He  has  seen  them,  in  one  American 
city  at  least,  successfully  invade  several  industries  in  which 
machinery  is  almost  wholly  employed.  He  knows  that 
the  Chinese  manufacturers  of  shoes  and  undergarments 
in  San  Francisco  could  easily  monopolize  the  trade  in  those 
articles  if  the  barrier  of  prejudice  did  not  exist,  and  that 
in  spite  of  it  they  successfully  compete,  adding  to  their 
skillfulness  day  by  day.  Possessed  of  this  knowledge,  it 
is  not  remarkable  that  the  workingman  should  regard  with 
apprehension  the  growing  exports  of  textile  and  other  ma- 
chinery to  Oriental  countries.  He  understands  the  full 
significance  of  such  a  movement,  and  all  the  talk  about 
race  superiority  will  fail  to  convince  him  that  Americans 
and  other  Westerns  can  meet  this  new  competition  without 


3i6         PROTECTION  AND  PROGRESS 

descending  to  the  social  level  of  the  new  competitors.  The 
workingman,  educated  by  experience,  refuses  to  be  misled 
into  believing  that  the  effect  of  unrestrained  competition 
is  uplifting.  He  understands  that  the  gains  the  working- 
men  of  certain  parts  of  the  Western  world  have  made  dur- 
ing the  past  fifty  years  were  due  to  adventitious  circum- 
stances which  are  rapidly  disappearing  and  will  wholly 
vanish  when  many  peoples  now  in  a  state  of  dependency 
develop  their  manufacturing  capabilities  and  enter  the  com- 
petitive struggle. 

This  knowledge  is  responsible  for  the  growth  of  pro- 
tectionism among  workingmen,  not  only  in  countries  where 
it  has  been  adopted  as  a  national  policy,  but  in  free  trade 
England  as  well,  where  it  has  assumed  the  extreme  form 
of  trades  unionism.  And  the  sentiment  is  growing  rapidly 
among  a  class  the  workingmen  have  hitherto  held  respon- 
sible for  many  of  their  woes.  The  middleman,  under  the 
stress  of  excessive  competition,  has  lost  his  sense  of  secur- 
ity. "It  is  estimated,"  says  a  writer  in  a  financial  maga- 
zine, "that  in  our  large  cities  97  per  cent,  of  busi- 
ness men  fail."  He  adds:  "The  present  limited  oppor- 
tunities of  men  with  small  capital  are  in  striking  contrast 
with  their  opportunities  thirty  or  forty  years  ago.  Pow- 
erful trusts  now  monopolize  some  lines  of  business,  great 
corporations  have  absorbed  others,  and  large  department 
stores  have  destroyed  great  numbers  of  small  mercantile 
establishments."*  There  is  but  a  step  from  the  perception 
of  this  fact  to  the  recognition  of  that  other  important  fact 
which  protectionists  keep  constantly  in  mind,  namely,  that 
the  possession  of  capital  by  national  aggregates  operates 
in  precisely  the  same  fashion  that  it  does  between  the  indi- 
viduals of  a  nation,  and  that  it  would  be  as  hopeless  for 
a  country  with  an  inadequate  capital  to  compete  on  equal 


*Justi,  Hard  Times  and  Their  Cause,  Bankers'  Magazine  (London), 
September,   1896. 


CONSUMPTION  317 

terms  with  a  people  with  a  plethora  as  it  would  for  the 
small  trader  to  compete  with  the  large  department  stores, 
or  an  individual  with  a  small  plant  to  rival  a  great  corpora- 
tion engaged  in  the  same  line  of  manufacturing  as  himself. 

In  this  country  we  have  found  that  attempts  to  regu- 
late trusts  are  nullified  by  the  general  recognition  of  the 
fact  that  it  is  impossible  to  draw  the  line  at  the  place  where 
competition  ceases  to  be  beneficial,  but  no  such  diffi- 
culty confronts  us  in  determining  the  question  whether  we 
should  or  should  not  invoke  the  aid  of  a  protective  tariff 
to  offset  the  advantage  which  large  accumulations  of  capi- 
tal and  the  lower  compensation  of  labor  give  to  foreigners. 
By  limiting  the  area  of  competition  the  intensity  of  the 
evils  sketched  in  this  chapter  is  lessened  and  an  opportunity 
is  afforded  to  apply  a  remedy  the  application  of  which  would 
be  impossible  if  the  country  surrendered  itself  to  the  idea 
that  mankind  can  benefit  by  relegating  the  producer  to  the 
condition  of  a  toiler  hopeless  of  advancement.  This  would 
be  his  fate  if  he  were  doomed  to  enter  a  struggle  with 
the  whole  world,  and  thus  subject  himself  to  the  neces- 
sity of  competing  with  peoples  who  have  through  ages  of 
privation  learned  to  accommodate  themselves  to  conditions 
which  would  be  unendurable  to  men  whose  aspirations  for 
something  better  have  been  aroused  by  education  and 
example. 

The  Cobdenite  responds  to  these  natural  objections  by 
asserting  that  the  fierceness  of  the  competition  he  advocates 
will  create  wants  which  will  increase  the  opportunities  of 
the  workingman  and  better  his  condition,  and  to  support 
this  contention  he  presents  misleading  figures  and  facts 
bearing  on  the  commercial  development  of  Great  Britain, 
and  by  their  aid  endeavors  to  convey  the  impression  that 
an  experience  almost  wholly  due  to  the  enjoyment  of  a 
practical  monopoly  can  be  repeated  when  the  whole  world 
is  contending  for  the  opportunity  to  share  in  the  profits 
of  manufacturing. 


3i8         PROTECTION   AND  PROGRESS 

The  phrase  "the  markets  of  the  world"  has  taken  on  a 
new  significance  since  the  days  of  Cobden.  When  it  was 
first  used  by  Enghshmen  it  meant  that  there  were  numer- 
ous peoples  who  had  reached  a  high  state  of  development 
in  certain  directions  but  who  had  neglected  manufacturing 
and  were  ready  to  become  customers  of  a  more  enterpris- 
ing nation.  The  opportunity  to  supply  these  backward 
peoples  was  a  source  of  great  profit  so  long  as  they  re- 
mained in  a  state  of  dependence  upon  Englishmen,  but  when 
they  formed  the  determination  to  create  manufacturing  in- 
dustries of  their  own  a  radical  change  was  brought  about. 
First  it  manifested  itself  in  a  lessening  demand  for  the 
manufactured  products  of  Great  l^ritain  by  the  particular 
countries  developing  the  new  industries.  For  a  time  this 
decrease  of  demand  in  one  quarter  was  offset  by  the  gain 
of  customers  in  previously  unexpected  sections  of  the  world, 
but  very  soon  the  countries  once  dependent  upon  Great  Bri- 
tain not  only  ceased  to  draw  their  supplies  of  manufactured 
articles  from  her,  but  actually  began  to  compete  in  the  mar- 
kets of  the  world  in  order  to  secure  an  outlet  for  the  sur- 
plus products  of  their  newly  created  industries. 

The  result  has  produced  a  condition  which  completely 
negatives  the  theories  of  Cobden  and  is  forcing  the  accep- 
tance of  a  more  rational  system  of  political  economy,  one 
which  proceeds  on  the  assumption  that  it  is  the  part  of 
wisdom  for  every  nation  to  develop  its  own  resources,  and 
that  external  trade  can  only  prove  beneficial  to  mankind 
when  it  is  devoted  to  the  exchange  of  non-competing  articles. 
The  complete  refutation  of  the  idea  that  the  markets  of  the 
world  are  illimitable  is  working  m.iracles  in  the  way  of  con- 
viction. It  is  impossible  for  a  foolish  theory  to  survive 
very  long  after  it  is  practically  disproved.  When  it  is 
once  fully  recognized  that  there  are  bounds  to  the  ability 
to  dispose  of  surplus  products  the  argument  that  the  mar- 
kets of  the  world  are  better  than  the  home  market  will 
cease  to  be  employed.     It  will  be  the  aim  of  the  writer 


CONSUMPTION  319 

in  the  next  chapter  to  demonstrate  that  an  expansion  of 
the  world's  markets  during  the  next  half  century  similar 
to  that  witnessed  since  1850  cannot  be  hoped  for,  and  abun- 
dant evidence  will  be  presented  which  will  prove  that  the 
stage  has  nearly  been  reached  when  the  successful  entrance 
of  a  new  competitor  in  these  so-called  markets  of  the  world 
will  mean  the  exclusion  of  those  who  already  occupy  the 
field. 


CHAPTER  XV. 

EXTERNAL  TRADE. 

LIMITED   CAPACITY   OF  THE   MARKETS  OF    NON-MANUFACTUR- 
ING PEOPLES. 

Expansion  of  British  imports  and  contraction  of  her  exports— The 
increased  imports  largely  composed  of  manufactured  articles — 
The  prospects  of  an  intense  struggle  for  existence — Effects  of 
the  development  of  American  industry — American  experience 
not  likely  to  prove  unique — Rapid  expansion  of  industry  in  Ger- 
many— Promise  of  a  speedy  growth  of  manufacturing  industry 
in  Russia — The  factor  of  Oriental  competition — The  industrial 
feature  of  the  future  will  be  the  promotion  of  domestic  pro- 
ductivity and  the  relegation  of  trading  to  the  second  place — 
Trade  can  only  be  obtained  at  the  expense  of  an  already  estab- 
lished rival — Obstacles  to  the  extension  of  British  trade  offered 
by  trades  unionism — Threats  of  a  European  coalition  to  pre- 
vent disaster  to  industry  from  the  encroachments  of  "Monroe- 
ism"— The  assault  on  the  integrity  of  Oriental  nations  inspired 
by  the  desire  to  monopolize  the  markets  of  Asia — Burden  borne 
by  the  British  taxpayer  to  acquire  and  hold  African  markets — 
Three-fifths  of  the  British  revenue  expended  for  the  purpose 
of  maintaining  and  extending  external  trade — The  true  cause 
of  the  rise  and  decline  of  nations — Probable  results  of  the  intro- 
duction of  modern  methods  to  the  notice  of  Orientals. 

Not  long  since  an  American  writer  attempted  to  show 
that  New  York  was  destined  to  he  the  future  metropolis  of 
the  world.  The  arguments  used  hy  him  in  support  of  his 
helief  resemble  those  advanced  by  the  Cobdenites  in  two  or 
three  important  particulars,  and  are  therefore  worth  noting. 
He  said :  "Two  thousand  years  ago  the  civilized  world  was 
grouped  about  the  Mediterranean.  Knowing  that,  a  geog- 
rapher could  have  told  that  about   where  Rome  was,  or 

320 


External  TRADE  321 

opposite  her,  where  Carthage  had  risen,  must  be  the  world's 
metropohs;  that  there  could  be  but  one,  and  that  the  one 
that  had  Europe  behind  it  must  one  day  outstrip  the  other, 
behind  which  the  Libyan  desert  stretched.  But  the  world 
then?  Who  knew  what  realms  beyond  Athos  might  out- 
rival those  washed  by  the  tideless  ocean  where  Roman  and 
Carthaginian  galleys  crashed  together  in  fights?  To-day 
there  are  no  new  worlds  to  find.  So  long  as  the  continents 
maintain  their  relative  position  the  North  Atlantic  ocean 
must  be  the  center  of  the  world's  civilization ;  so  long  as 
the  great  rivers  that  now  drain  them  rise  in  the  same  high- 
lands and  reach  the  ocean  through  the  same  valleys  as  now, 
there  is  one  spot — the  port  of  New  York — about  which  must 
grow  the  world's  metropolis.  So  fast,  indeed,  do  events 
move  that  the  children  of  to-day  will  as  surely  see  New 
York  the  world's  center  as,  when  most  of  us  were  children, 
London  was  such.  The  glory  of  London  is  that  of  conditions 
which  have  gone  forever ;  that  of  New  York  the  sunrise  of 
an  endless  day."* 

Only  making  casual  reference  to  the  fact  that  the  center 
of  exchange  in  the  world,  as  it  was  known  before  the  dis- 
covery of  America  by  Columbus,  shifted  from  Rome  to  Con- 
stantinople, t  and  subsequently  to  the  Italian  commercial 
cities,!  we  proceed  to  call  attention  to  the  singular  assump- 
tion that  it  is  the  destiny  of  New  York  to  become  the 
metropolis  of  the  world,  not  for  a  period,  but  for  all  time. 
Such  an  idea  could  only  have  taken  form  in  the  brain  of  a 
man  imbued  with  the  belief  that  the  world's  economic  meth- 
ods are  unchangeable  and  that  mankind  must  continue  eter- 
nally in  its  course  of  wasteful  exchange.  No  one  with  the 
dimmest  foreshadowing  of  the  possible  changes  that  may  be 


♦Warner,   Matters   That   Suggest   Themselves,   "Municipal   Affairs," 
March,    1898. 

•|- Adams,  Law  of  Civilization  and  Decay,  p.  20. 
J  Ibid,  p.  97. 
21 


^±2         PROTECTION   AND   PROGRESS 

worked  by  a  general  diffusion  of  mechanical  skill  would 
have  ventured  to  assume  that  contiguity  to  the  ocean  would 
insure  primacy  for  a  city ;  least  of  all  would  he  have  claimed 
that  the  city  built  upon  the  shores  of  the  Atlantic  by  reason 
of  its  position  must  always  remain  the  metropolis  of  the 
world. 

If  any  foundation  existed  for  the  belief  in  the  illimita- 
bility  of  the  world's  markets  the  theory  that  New  York  is 
destined  to  become  and  remain  the  world's  center  might 
deserve  respectful  consideration.  The  idea  that  the  Cobden- 
ites  once  entertained,  that  those  parts  of  the  world  having 
no  manufacturing  industries  would  always  remain  in  a 
state  of  dependence  upon  nations  that  had  already  developed 
a  high  degree  of  industrial  ability,  made  it  seem  reasonable 
that  the  Western  world  would  always  retain  its  commercial 
supremacy,  and  that  the  entrepots  of  to-day  would  continue 
to  grow  in  importance.  But  recent  manifestations  in  the 
Orient  have  ^ensibly  modified  this  optimistic  view  and  raised 
the  question  whether  the  future  may  not  witness  an  awaken- 
ing of  the  slumbering  peoples  of  the  East. 

But,  apart  from  this  consideration,  there  are  other  indi- 
cations which  point  conclusively  to  the  inability  of  peoples 
destitute  of  a  highly  developed  civilization  to  greatly  in- 
crease their  consumption  of  manufactured  articles.  The 
relatively  slow  growth  of  trade  with  backward  peoples  and 
the  phenomenal  increase  of  output  in  countries  with  estab- 
lished manufacturing  industries  has  already  created  a  condi- 
tion which  confutes  the  predictions  of  the  Cobdenites  and 
makes  reference  to  the  profits  to  be  made  in  expanding 
foreign  markets  seem  like  a  mockery. 

Great  Britain  has  long  been  regarded  as  the  typical 
commercial  state  of  the  world  and  her  career  has  been  cited 
by  economists  to  illustrate  the  advantages  flowing  from  dis- 
regarding a  contracted  home  market  in  order  to  secure  the 
profits  arising  from  unrestrained  trade  with  peoples  in  every 
part  of  the  globe.    In  another  place  it  was  shown  that  much 


EXTERNAL  TRADE  323 

of  the  prosperity  erroneously  attributed  to  the  operations 
of  unrestrained  commercial  intercourse  was  really  due  to  the 
fact  that  Great  Britain  was  in  a  condition  of  readiness  to 
take  advantage  of  the  enormous  changes  wrought  by  the 
discovery  of  gold  in  California  and  Australia,  and  that  in 
all  probability  her  expansion  would  have  been  as  rapid  under 
the  system  of  taxation  in  vogue  before  the  repeal  of  the 
corn  laws  as  under  so-called  free  trade.  The  people  who 
bought  manufactured  articles  from  Great  Britain  after  1848 
did  not  patronize  that  country  because  it  offered  a  freer 
market  than  formerly  for  agricultural  products;  they  did 
so  because  the  injection  of  a  large  quantity  of  the  precious 
metals  into  the  money  system  of  the  world  acted  as  a  great 
stimulus  to  industry  and  created  wants  which  could  only  be 
satisfied  by  a  resort  to  the  stocks  of  the  manufacturers  of 
England. 

As  soon  as  the  practical  monopoly  enjoyed  by  Great 
Britain  disappeared  her  commercial  attractiveness  began  to 
wane.  In  spite  of  her  enormous  purchases  from  foreigners, 
which  the  earnings  from  capital  invested  in  foreign  countries 
enabled  her  to  increase  from  year  to  year,  she  has  not  suc- 
ceeded in  effecting  a  relative  expansion  of  her  exports.  On 
the  contrary,  there  is  a  constantly  increasing  volume  of  im- 
ports and  a  relative — in  some  years  it  has  been  absolute — 
decline  of  exports. 

The  features  of  this  decline  of  the  British  export  trade, 
dwelt  upon  in  another  chapter,  if  attentively  studied  will 
convince  any  one  that  the  theory  advanced  by  the  Cobden- 
ites  that  a  nation  which  freely  opens  its  ports  places  other 
nations  at  a  disadvantage  in  trading  is  unsound.  It  is  pos- 
sible that  circumstances  may  sometimes  render  the  sacrifice 
of  a  minor  industry  advisable ;  it  may  even  be  admitted 
that  Great  Britain  in  abandoning  her  farmers  to  the  mercies 
of  an  unrestrained  competition  acted  wisely,  but  it  will 
hardly  be  contended  that  a  policy  which  has  resulted  in  ex- 
posing to  assault  the  peculiar  industries  supposed  to  have 


324         PROTECTION  AND  PROGRESS 

been  called  into  existence  and  fostered  by  free  trade  is  a 
wise  one.  That  the  manufacturing  industry  of  Great  Britain 
is  now  subject  to  the  inroads  of  foreigners  is  shown  by  the 
constantly  increasing  volume  of  imports  of  articles  manufac- 
tured in  foreign  countries.  The  annual  excess  of  imported 
over  exported  articles,  which  reaches  over  six  hundred  mil- 
lion dollars,  is  chiefly  represented  by  manufactures  ready  for 
consumption.  In  1895  the  value  of  the  imports  into  Great 
Britain  of  manufactured  articles  in  that  classification  was 
£75,625,242,  and  in  addition  to  this  amount  several  millions 
of  partially  manufactured  goods,  such  as  dye  stuffs  and 
metals  on  which  labor  had  been  expended,  were  also  brought 
into  the  country.  These  imports  have  admittedly  displaced 
British  labor  and  have  contributed  to  the  increase  of  the 
social  wreckage.  The  record  shows  that  once  flourishing 
British  industries  have  succumbed  to  unrestrained  compe- 
tition, and  it  is  feared  that  others  will  meet  the  same  fate. 

It  has  hitherto  been  claimed  by  the  Cobdenites  that  the 
losses  thus  sustained  are  fully  compensated  by  the  extension 
of  British  markets  in  other  countries,  but  there  is  no  foun- 
dation for  this  assumption.  It  is  true  that  the  exports  of 
British  produce  and  manufactures  show  a  small  absolute 
increase,  but  a  relative  comparison  shows  that  the  progress 
is  not  commensurate  with  the  growth  of  population.  It  has 
been  pointed  out  that  "if  the  United  Kingdom  is  to  main- 
tain even  its  present  level  of  prosperity  under  the  present 
conditions  of  population  and  of  manufacture,  it  is  abso- 
lutely necessary  that  its  export  trade  should  increase  in  value 
by  about  £2,600,000  annually."*  The  writer  who  makes 
this  observation  after  a  careful  survey  expresses  the  opinion 
that  the  conditions  are  such  that  Great  Britain  cannot  hope 
to  largely  extend  her  export  trade  without  making  grave 
sacrifices.     He  rejects  the  theory  so  persistently  adhered 


*  Kershaw,  The  Future  of  British   Trade,   Fortnightly,   November, 
1897. 


EXTERNAL  TRADE  ^25 

to  by  some  writers  that  English  workingmen  enjoy  a  natural 
superiority  over  foreigners,  and  expresses  the  belief  that 
the  better  conditions  of  labor  hitherto  prevailing  in  England 
only  served  to  increase  the  cost  of  production  and  to  handi- 
cap the  British  in  competing  with  the  foreign  made  goods 
in  the  home  or  neutral  markets  of  the  world.  Most  signifi- 
cant of  all,  however,  is  his  admission  that  the  British  have 
entered  on  another  path  of  industrial  development,  which 
he  says  must  lead  to  "an  international  industrial  warfare  of 
the  most  savage  intensity.  This  warfare,"  he  adds,  "if  it  be 
permitted  to  proceed  to  its  logical  issue,  can  have  but  one 
result — the  reduction  of  the  standard  of  life  and  comfort 
in  all  countries  to  the  lowest  level  at  which  human  beings  in 
any  part  of  the  world  are  willing  to  exist."* 

The  consequences  of  such  a  warfare  may  be  discussed 
elsewhere ;  here  we  have  merely  to  deal  with  the  question 
whether  the  sacrifice  of  the  home  industry  can  be  made  good 
by  a  resort  to  other  markets.  If  the  international  struggle 
referred  to  is  already  on  it  must  be  obvious  that  the  markets 
of  the  world  are  now  saturated  and  do  not  promise  to  in- 
crease their  receptivity  in  the  near  future.  In  short,  an 
international  struggle  for  trade  means  that  the  productive 
capacity  of  the  manufacturing  nations  exceeds  the  con- 
sumptive ability  of  the  world.  This  condition  will  become 
more  intense  with  every  improvement  of  machinery,  and  as 
the  determination  of  backward  peoples  to  shake  oflF  the  yoke 
of  dependence  finds  expression  in  action.  Its  special  distin- 
guishing mark  will  be  the  tendency  of  nations  to  cease  im- 
porting those  things  which  they  may  easily  produce  for 
themselves,  and  substitute  for  the  wholly  wasteful  and  irra- 
tional system  of  external  trade  now  in  vogue  a  sensible 
exchange  of  non-competing  products. 

Necessarily  such  a  change  must  bring  about  a  relative 
contraction  of  foreign  trade.     If  there  is  any  foundation 

*Kershaw,  The  Future  of  British  Trade.  Fortnightly,  November, 
1897. 


326         PROTECTION   AND   PROGRESS 

for  the  belief  that  all  civilized  peoples  can  acquire  manu- 
facturing skill,  and  if  there  is  truth  in  the  statement  that 
such  raw  materials  as  iron  and  coal  are  to  be  found  in 
abundance  throughout  the  world,  we  may  look  forward  to  a 
steady  promotion  of  domestic  production  and  a  correspond- 
ing shrinkage  of  external  trade. 

We  have  seen  that  the  development  of  the  iron  industry 
in  the  United  States  has  rendered  this  country  independent 
of  foreign  sources  of  supply,  and  while  we  may  not  assume 
that  our  annual  production  of  i2,ooo,ocfO  tons — the  output 
for  the  year  1898 — represents  a  diminution  of  the  world's 
markets  as  great  as  these  figures  indicate,  it  is  at  least 
permissible  to  look  upon  it  as  an  enormous  curtailment  of 
an  export  trade  which  Great  Britain  might  have  enjoyed  had 
we  refrained  from  attempting  to  supply  our  own  wants. 
It  is  inconceivable,  of  course,  that  we  should  have  been 
able  to  consume  any  such  quantity  of  pig  iron  as  an  annual 
production  of  twelve  millions  implies,  if  we  had  been  com- 
pelled to  buy  from  foreigners,  but  even  as  a  purely  agri- 
cultural country — the  destiny  marked  out  for  the  United 
States  by  the  Cobdenitcs — we  should  have  required  two  or 
three  million  tons  annually  if  we  had  maintained  the  rate  of 
consumption  which  obtains  in  countries  emancipated  from 
the  wooden  plow  and  similar  badges  of  backwardness. 

Instead,  however,  of  drawing  upon  the  foreigner  for 
supplies  of  iron  and  steel  we  are  now  exporting  from  our 
surplus  of  those  products.  Imports  of  those  articles  still 
figure  in  the  custom  house  returns,  but  they  are  balanced 
by  exports.  In  1896  the  value  of  all  forms  of  iron  and  steel 
and  manufactures  therefrom  imported  into  the  United  States 
was  $25,338,103,  and  in  the  same  year  our  exports  of  the 
same  footed  up  $41,160,877.*  It  is  impossible  to  study  the 
relation  of  these  statistics  to  those  of  Great  Britain  and 
escape  the  conviction  that  the  advance  of  this  country  was 

*Statistical  Abstract  of  the  United  States,   1896. 


EXTERNAL  TRADE  327 

at  the  expense  of  the  British  manufacturer,  for  while  the 
progress  made  in  the  United  States  in  this  particular  in- 
dustry during  recent  years  has  been  phenomenal,  production 
in  the  land  which  once  was  supreme  in  the  iron  market  of  the 
world  has  practically  remained  at  a  standstill. 

Germany  has  had  an  experience  somewhat  similar  to 
that  of  the  United  States  and  has  materially  interfered  with 
the  extension  of  British  trade.  For  a  long  period  the  Ger- 
mans remained  in  a  partial  state  of  dependence  upon  the 
English  for  their  supplies  of  manufactured  articles  of  iron 
and  steel,  but  during  the  regime  of  Bismarck  the  commercial 
policy  of  the  country  was  changed  and  every  effort  was  made 
to  develop  the  manufacturing  abilities  of  the  German  people. 
In  another  place  the  fact  has  been  cited  that  Herbert  Spencer 
and  other  adherents  of  the  laissez  faire  policy  had  so  de- 
ceived themselves  regarding  the  capacity  of  the  Germans 
that  during  the  '50s  they  were  accustomed  to  speak  with 
contempt  of  the  backwardness  of  the  nation,  attributing  it 
to  the  operations  of  bureaucracy,  which,  they  asserted,  had 
stunted  the  intellect  and  cramped  the  energies  of  the  people. 
In  a  few  years  after  the  inauguration  of  a  protective  system, 
which  has  been  maintained  side  by  side  with  a  constantly 
increasing  degree  of  state  supervision,  external  and  internal, 
the  Germans  have  built  up  a  tremendous  manufacturing 
industry,  which,  like  that  created  by  the  Americans  with  the 
aid  of  the  same  machinery,  is  producing  a  constantly  growing 
surplus  that  seeks  the  same  markets  hitherto  held  by  Great 
Britain,  and  is  in  many  cases  successfully  ousting  British 
products  from  them.  The  signs  are  multiplying  that  the 
Russians— an  undreamed  of  industrial  factor  a  quarter  of  a 
century  ago — are  traveling  along  the  same  road  as  Germany 
and  the  United  States,  and  the  prospects  are  that,  long  before 
the  first  quarter  of  the  new  century  has  been  completed,  that 
hitherto  backward  nation  will  have  taken  first  rank  among 
the  industrial  nations  of  the  world,  and  instead  of  being  a 
consumer  of  the  rnanufactured  products  of  the  countries 


328         PROTECTION   AND   PROGRESS 

with  established  industries,  hke  them  she  will  be  seeking 
an  outlet  for  surplus  production. 

If  we  extend  our  point  of  view  and  make  it  embrace 
India,  China  and  Japan,  and  include  in  it  Mexico,  which  has 
of  late  exhibited  a  remarkable  manufacturing  progress,  and 
Canada,  whose  efforts  to  achieve  industrial  independence 
are  rewarded  with  a  fair  degree  of  success,  and  other  British 
colonies  where  the  manufacturing  instinct  is  temporarily 
suppressed,  we  see  rising  before  us  possibilities  which  ut- 
terly negative  the  free  trade  assumption  that  the  chief  indus- 
trial feature  of  the  future  will  be  the  extension  of  external 
trading,  and  that  the  world  will  continue  as  heretofore  to 
waste  a  large  proportion  of  energy  and  of  fuel,  its  most 
valuable  auxiliary  in  the  creation  of  energy,  in  the  wasteful 
work  of  transporting  products  to  and  fro. 

With  the  disappearance  of  this  belief  will  vanish  the 
overconfident  assumption  quoted  in  the  beginning  of  this 
chapter,  that  New  York  is  destined  to  be  the  permanent 
metropolis  of  the  world.  That  destiny  may  yet  fall  to  some 
inland  city,  and  the  future  may  witness  a  repetition  of 
the  polity  of  the  Oriental  empires  of  antiquity  which  set  no 
particular  value  on  the  coast  line  of  their  vast  territories.* 
It  may  not  be  as  visionary  as  some  seem  to  imagine  for  the 
people  of  Chicago  to  look  forward  to  a  day  when  their  city 
shall  exceed  in  populousness,  wealth  and  importance  any 
city  on  the  American  seaboard,  and  it  is  not  entirely  out  of 
the  question  that  in  the  rearrangement  which  must  follow 
that  awakening  of  the  Orient,  so  confidently  predicted  by 
many  keen  observers,  a  metropolis  may  arise  on  the  Pacific 
whose  position  with  reference  to  Asia  may  make  it  take 
precedence  of  New  York  and  London.  That  is  the  future 
which  James  Anthony  Froude  predicted  for  San  Francisco, 
his  prophecy  being  impelled  by  the  conviction  that  the  enor- 
mous natural  resources  of  California  and  the  other  States  of 

*Holm,  History  of  Greece,  Vol.  I,  Chap.  XXIII,  p.  319. 


EXTERNAL  TRADE  329 

the  Pacific  coast  and  the  needs  of  the  Orientals  and  of  the 
inhabitants  of  antipodean  regions  would  promote  a  trade  of 
undreamed  of  proportions. 

But  whatever  changes  the  future  may  bring,  the  evidence 
is  overwhelming  that  they  will  be  effected  by  a  more  rational 
system  of  trading  than  that  now  pursued.  It  is  impossible  to 
believe  that  the  lack  of  economy  now  so  manifest  will  endure 
for  any  great  length  of  time.  As  the  years  roll  on  the  diffi- 
culties now  complained  of  by  manufacturers  in  the  countries 
of  estabhshed  industries  will  become  more  acute.  The 
trouble  they  are  now  experiencing  in  finding  an  outlet  for 
their  surplus  production  will  become  more  and  more  aggra- 
vated as  manufacturing  skill  spreads  throughout  the  world. 
Unless  the  peoples  who  are  now  in  a  state  of  dependence 
can  be  taught  to  greatly  increase  their  productivity  their 
consumptive  ability  will  not  keep  pace  with  the  manufactur- 
ing facilities  of  the  present ;  their  present  condition  cer- 
tainly does  not  hold  out  the  hope  that  consumption  can,  un- 
der any  circumstances,  be  developed  to  such  an  extent  as 
to  profitably  absorb  the  surpluses  of  all  the  nations  eagerly 
seeking  customers  in  the  markets  of  the  world. 

The  property  of  expansion  so  freely  attributed  to  these 
markets  of  the  world  by  Cobdenites  is  entirely  mythical. 
If  there  was  any  ground  for  the  assumption  that  there  is 
room  to  spare  in  them  we  would  not  be  constantly  witnessing 
alarms  bordering  on  panics  in  the  countries  with  established 
industries  whenever  fresh  competitors  make  their  appear- 
ance. If  the  markets  of  the  world  were  illimitable  such  ex- 
pressions as  those  made  by  the  president  of  the  British  Board 
of  Trade  would  not  be  heard.  That  official,  in  an  address 
to  the  Chamber  of  Commerce  of  Croydon,  England,  re- 
marked :  "We  all  know  an  American  firm  obtained  the  con- 
tract for  the  Central  Underground  Railway  of  London,  as 
its  bid  was  lower  than  those  of  the  English  concerns  and  it 
could  deliver  the  supplies  three  months  ahead  of  the  British 
tenders.    Many  important  continental  orders  have  also  gone 


330         PROTECTION   AND   PROGRESS 

to  America,  and  the  same  is  to  be  said  of  Egypt  and  Japan, 
where  the  Americans  are  doing  work  that  EngHshmen  should 
have  done."  From  this  concluding  sentence  we  must  not 
infer  that  the  speaker  was  advancing  the  idea  that  steps 
should  be  taken  to  hold  the  trade  for  Englishmen  by  a  resort 
to  anything  in  the  nature  of  protection.  Nothing  was  further 
from  his  mind,  as  will  be  seen  from  his  explanation  :  "Amer- 
ica's successful  competition,"  he  said,  "is  due  to  her  enter- 
prise in  embarking  capital,  but  it  is  yet  more  due  to  the 
freedom  her  manufacturers  enjoy  of  employing  the  best 
machinery  and  working  it  in  the  most  economical  manner, 
untrammeled  by  the  restrictions  which  have  hampered  man- 
ufacturers here  (in  Great  Britain)."* 

There  is  no  hint  here  of  obtaining  relief  from  the  evils 
of  which  this  Briton  complained  by  resorting  to  unexploited 
markets.  On  the  contrary,  he  presents  the  issue  clearly  and 
truthfully  and  leaves  no  doubt  in  the  mind  of  his  hearer  that 
there  is  a  struggle  for  customers  and  that  the  success  of  one 
competitor  means  the  failure  of  another.  He  does  not,  like 
the  American  Cobdenite,  Mills  of  Texas,  assure  his  hearers 
that  the  loss  of  the  home  customer  makes  no  difference  be- 
cause the  markets  of  the  world  are  illimitable,  but  he  plainly 
says  that  the  English  workingmen  are  committing  a  fatal 
error  in  not  permitting  labor-saving  machinery  to  be  used  to 
its  fullest  extent  and  in  otherwise  refusing  to  accede  to  the 
demands  of  employers.  In  short,  his  contention  is  that  there 
is  a  certain  demand  to  supply  and  that  the  privilege  of  sup- 
plying it  must  fall  to  the  people  able  to  do  so  most  cheaply ; 
therefore  the  alternative  presented  to  the  British  working- 
man  is  not  the  quest  of  other  markets,  for  they  do  not  exist, 
but  whether  they  will  consent  to  work  for  less  wages  or 
starve.  As  it  is  often  rudely  put,  it  is  "a  case  of  half  a  loaf 
or  none." 

If  the  trouble  confronting  the  people  of  Great  Britain 

♦Richie,  president  of  London  Board  of  Trade,  speech  before  Cham- 
ber of  Commerce  of  Croydon,  Nov.  23,  1897. 


EXTERNAL  TRADE.  331 

were  confined  to  that  country  it  might  be  assumed  that  there 
are  conditions  existing  there  which  make  it  impossible  for 
the  British  to  compete  on  favorable  terms  with  the  manu- 
facturers of  other  nations.  Indeed,  the  official  just  quoted 
expressly  charges  that  recent  British  commercial  backsets 
are  due  to  the  propensity  of  workingmen  to  demand  more 
than  the  employer  can  afford  to  pay  and  retain  his  trade. 
The  employers'  argument  is  that  the  workingmen  of  Great 
Britain  must  accommodate  themselves  to  the  conditions 
of  labor  which  obtain  in  other  countries,  cease  contending 
against  the  reduction  of  wages  and  abate  their  demands  for 
shorter  hours  of  work.  They  must,  in  brief,  do  what  the 
Germans  do — work  long  hours  and  accept  lower  compensa- 
tion— if  British  manufacturers  are  to  hold  their  own.  If 
the  latter  cannot  do  so,  then  the  workingman  must  become 
part  of  the  social  wreckage,  for  employers  will  not  consent 
to  manufacture  at  a  loss. 

But  when  we  turn  our  attention  to  Germany,  where 
the  conditions  which  Englishmen  refer  to  as  inferior  exist, 
we  find  that  the  same  fierce  struggle  is  in  progress,  and 
that,  if  anything,  the  apprehension  concerning  the  future 
is  more  pronounced  than  in  Great  Britain.  Take  this 
expression  of  opinion  of  one  of  the  political  leaders  of 
Germany  in  a  debate  in  the  Reichstag  over  the  Government's 
naval  bill.  The  speaker,  Herr  Hammacher,  said:  "Pan- 
Americanism  is  for  Germany  more  momentous  than  Mon- 
roeism. The  United  States  are  not  to  be  considered  on  the 
same  footing  as  a  single  European  state,  but  rather  entirely 
as  a  new  continent  with  regard  to  producing,  and  my 
opinion,  which  is  shared  by  eminent  statesmen  and  has 
also  been  expressed  recently  by  Count  Goluchowski,  is  that 
European  states  will  in  the  coming  century  be  obliged  to 
co-operate  in  order  to  support  each  other  in  this  struggle 
for  existence  with  America."* 


♦Hammacher,  speech  in  German  Reichstag,  Dec.  9,  1897. 


332         PROTECTION  AND  PROGRESS 

Interpreted  into  plain  English,  this  means  that  in  the 
speaker's  judgment  it  may  become  necessary  during  the 
coming  century  for  the  nations  of  Continental  Europe  to 
combine  in  order  to  save  themselves  from  the  consequences 
of  their  overproduction.  In  other  words,  he  thinks  it  will 
be  necessary  for  Europe  to  unite  to  prevent  America's 
shaking  ofif  the  yoke  of  foreign  dependence ;  or,  if  a  more 
contracted  view  of  his  meaning  is  taken,  self-preservation 
will  require  Europeans  to  band  together  to  prevent  the 
United  States  from  absorbing  the  trade  of  this  continent, 
as  it  is  feared  she  will  when  her  resources  are  fully  developed 
and  her  facilities  for  internal  distribution  are  commensurate 
with  her  productivity. 

Such  an  alliance,  could  it  be  effected,  would  present 
some  features  of  resemblance  to  that  of  the  French  and 
English  which  had  for  its  object  the  opening  of  Oriental 
countries  to  Western  trade.  The  mainspring  in  each  in- 
stance is  precisely  the  same — the  necessity  of  securing  an 
outlet  for  surplus  products — and  the  methods  of  bringing 
about  the  result  would  differ  in  no  essential  particular.  The 
trade  doors  of  China  and  Japan  were  opened  by  force,  and 
the  Americans,  according  to  the  idea  outlined  by  Herr  Ham- 
macher  and  Count  Goluchowski,  are  to  be  prevented  by  force 
from  attaining  their  fullest  development  lest  it  interfere  with 
the  extension  or  preservation  of  European  trade. 

That  an  understanding  of  the  kind  suggested  by  Count 
Goluchowski  will  ever  be  reached  is  improbable.  No  doubt 
the  dread  of  American  competition  may  inspire  such  a 
desire,  but  European  rivalry  would  prevent  Its  gratification. 
Recent  disputes  over  the  division  of  trade  and  territory  in 
China  indicate  the  impossibility  of  agreement.  In  the 
English  House  of  Commons  in  the  early  part  of  1898  Mr. 
Curzon,  Parliamentary  Secretary  of  the  Foreign  Oflfice, 
replying  to  a  question  put  by  Sir  Ellis  Ashmead-Bartlett, 
said  that  "British  interests  in  China  were  paramount,  but 
not  exclusive.    The  British  nation,"  he  contended,  "would 


EXTERNAL  TRADE  333 

not  be  justified  in  regarding  legitimate  competition  with 
"  jealousy,  but  ought  rather  to  use  all  efforts  to  keep  in  an 
age  of  competition  what  was  won  in  an  age  of  monopoly," 
He  added  it  was  "Great  Britain's  policy  to  prevent  disrup- 
tion and  oppose  the  alienation  of  Chinese  territory,"  and 
it  was  therefore  unlikely  that  she  would  regard  with  satis- 
faction the  attempts  of  others  in  the  direction  of  such 
disruption.* 

Despite  this  official  threat,  Russia  and  Germany  per- 
severed in  their  plans,  the  former  seizing  and  holding 
Port  Arthur  and  the  Germans  Kiaochau,  and  in  the  fullness 
of  time  their  possessions  will  be  extended.  What  may 
result  in  future  from  this  movement  it  would  be  impossible 
to  tell.  The  British  assumption  is  that  whenever  their 
rivals  establish  themselves  their  first  step  will  be  to  raise 
trade  barriers.  That  this  is  likely  no  one  will  question,  but 
it  is  noteworthy  that  no  English  writer  ventures  to  assert 
that  the  occupied  countries  will  suffer  because  of  such 
interposition.  In  a  feeble  way  it  is  intimated  that  general 
competition  would  be  more  beneficial  to  the  Orientals,  but 
most  of  the  discussions  leave  the  latter  out  of  consideration. 
The  question  is  merely :  Who  shall  enjoy  the  trade  which 
may  be  created  by  opening  up  the  parts  of  China  hitherto 
rigorously  closed  to  the  Western  world? 

When  the  matter  is  stated  in  this  fashion  it  is  at  once 
seen  that  the  squabble  is  one  over  markets,  and  that  there 
is  no  thought  of  bearing  "the  torch  of  civilization"  to  a 
people  now  in  commercial  darkness.  But  while  nothing 
of  the  kind  is  contemplated,  we  may  be  sure  that  the  torch 
will  illumine  the  darkness  and  perhaps  kindle  such  a 
conflagration  of  rivalry  that  the  Western  world  may  regret 
having  introduced  it.  The  significant  allusion  of  Mr.  Curzon 
above  quoted  to  the  gains  made  by  the  English  in  an  age  of 
monopoly  will  suggest  that  the  progress  of  China  under  the 

♦March  i,  1898. 


334         PROTECTION   AND   PROGRESS 

new  conditions  may  be  more  rapid  than  during  the  period 
when  the  British  sought  to  keep  the  Chinese  in  a  state  of 
dependency  on  the  manufacturers  in  England.  The  pohcy 
of  the  Continental  powers  may  be  shaped  to  the  same  end, 
but  there  are  circumstances  which  may  effect  a  substantial 
change  in  the  development  of  the  until  recently  moribund 
empire.  There  are  signs'  that  in  their  eagerness  to  avail 
themselves  of  the  varied  resources  of  China  Russia  and 
Germany  may  take  steps  to  promote  their  development,  and 
by  so  doing  create  a  home  industry  which  in  the  very  act  of 
creation  will  cultivate  the  mechanical  faculty  to  such  an 
extent  that  the  teeming  millions  will  be  converted  into 
rivals,  who,  instead  of  being  exploited  for  the  benefit  of 
Westerns,  will,  in  turn,  endeavor  to  compete  with  those 
upon  whom  they  were  formerly  dependent.  The  possibili- 
ties of  such  competition  will  be  referred  to  at  greater  length 
hereafter ;  here  they  are  only  suggested  to  emphasize  the 
assertion  that  the  Cobdenistic  idea  that  the  markets  of  the 
world  are  illimitable  is  an  absurd  fallacy,  and  that  those 
who  count  upon  Asia  as  a  future  absorbent  of  the  surplus 
manufactured  products  of  the  West  are  more  likely  to  see 
the  Orientals  develop  into  manufacturing  competitors  than 
to  remain  dependent  upon  the  countries  with  established 
industries. 

In  Africa  the  outlook  is  not  more  encouraging.  Although 
a  disposition  has  been  manifested  by  Western  nations  to 
shed  blood  and  waste  treasure  in  order  to  extend  mar- 
kets on  that  continent,  the  result  thus  far  has  not  been  prom- 
ising. A  writer  who  has  devoted  much  attention  to  the 
matter  tells  us  that  the  British  in  the  West  African  country 
are  pursuing  a  course  something  like  that  which  marks  the 
dealing  of  unscrupulous  whites  with  Indians  on  our  own 
frontiers.  Describing  the  valuable  resources  of  the  country, 
he  says :  "Hitherto,  with  the  notable  exception  of  the  Ni- 
ger Company,  our  mode  of  developing  this  most  valuable 
trade  has  been  by  importing  millions  of  gallons  of  noxious 


EXTERNAL  TRADE  335 

spirits,  to  the  demoralization  of  the  native  races  under  our 
protection/'  and  he  adds :  "Apart  from  the  moral  turpi- 
tude attached  to  such  a  system  of  trade,  apart  from  the  fact 
that  some  of  the  races  thus  demoralized  are  exceptionally 
fine  and  are  capable  of  reaching  a  much  higher  plane  of 
civilization,  instead  of  being  debased  to  a  lower  one — apart, 
in  brief,  from  the  moral  or  philanthropic  aspect  of  the  ques- 
tion, it  is  obvious  that  this  system  of  trade  is  short  sighted 
and  rotten.  Industry,  which  it  should  be  our  object  to  stim- 
ulate, is  limited  to  the  production  of  just  so  much  produce 
as  will  purchase  the  requisite  amount  of  spirit,  and  is  fur- 
ther enfeebled  by  the  very  object  of  purchase.  The  require- 
ments of  the  natives,  instead  of  increasing  with  their 
progress  in  civilization  and  comfort,  remain  stationary. 
Legitimate  trade  is  strangled  and  progress  is  arrested.  More- 
over, instead  of  exporting  to  these  great  markets  the  prod- 
uce of  Manchester  and  Sheffield  and  Birmingham,  and  stim- 
ulating thereby  our  home  industries,  we  are  content  to  ship 
the  spirits  made  in  Hamburg,  while  crying  out  that  trade 
is  depressed  at  home.  Nor  is  the  native  even  given  a  choice, 
as  it  would  seem  in  some  cases,  for  an  African  Bishop  re- 
ports at  Ilaro  that  'there  was  nothing  else  in  the  factories 
to  exchange  for  all  the  produce  but  rum  and  gin.'  These 
markets  are  old — old  as  the  days  when  the  export  consisted 
of  slaves  shipped  by  Liverpool  traders  to  America,  but  if 
once  this  suicidal  import  of  cheap  continental  gin  is  abol- 
ished and  these  countries  are  thrown  open  to  the  produce 
of  our  manufacturing  towns  they  will  be  new  markets  to 
Great  Britain."* 

It  would  seem  that  so  keen  an  observer  as  the  writer 
should  have  been  able  to  perceive  that  there  is  somthing 
incongruous  in  his  suggestion  that  it  should  be  the  object 
of  the  British  to  stimulate  industry  among  the  African 
races  in  order  to  place  them  on  a  higher  plane  of  civiliza- 

*Lugard,    New    British    Markets,    Nineteenth    Centurv,    September, 
1895. 


336         PROTECTION  AND   PROGRESS 

tion  and  his  assumption  that  when  quahties  of  this  kind 
are  once  taken  on  by  a  people  they  will  consent  to  remain 
in  a  state  of  dependence.  If,  as  Captain  Lugard  seems  to 
think,  industrial  education  could  be  confined  to  a  narrow 
groove  and  the  natives  would  meekly  accept  the  doctrine  that 
their  destiny  is  to  laboriously  produce  the  oil  of  the  Guinea 
palm  and  of  the  vegetable  products  for  which  the  region  is 
celebrated,  to  exchange  for  the  products  of  Birmingham, 
Manchester  and  other  cities  of  England  engaged  in  manu- 
facturing, his  views  might  receive  the  substantial  support 
of  the  British  trading  classes.  But  the  latter  have  been 
taught  by  experience  that  the  acquisition  of  industrial  habits 
by  the  people  of  a  new  country  is  perilous  to  the  export 
trade  by  which  they  profit.  They  have  seen  men  of  their 
own  race  in  the  United  States,  to  whom  industry  had  come 
with  the  mother's  milk,  refuse  to  believe  that  it  is  wise  to 
confine  their  operations  to  the  production  of  raw  materials, 
although  the  teachers  used  the  sugar  coated  pill  of  cheapness 
to  make  the  dose  palatable,  and  they  have  noted  that  the 
despised  Orientals,  the  East  Indians  for  instance,  when  the 
industrial  habit  is  introduced  soon  develop  a  tendency  to 
apply  it  to  the  production  of  things  which,  according  to  the 
Cobden  theory,  ought  to  be  made  in  the  world's  workshop, 
England.  Seeing  these  things  and  appreciating  their  bear- 
ing, the  British  trading  classes  in  their  dealings  with  Afri- 
cans deliberately  adopt  the  policy  which  the  writer  says  is 
"shortsighted  and  rotten."  It  may  be  all  that,  but  the  keen 
trader  is  willing  to  take  the  present  benefits  rather  than 
trust  to  the  prospective  gains  which  might  result  from  a 
policy  of  systematically  encouraging  industry  among  races 
which  critics  pronounce  "exceptionally  fine"  and  "capable 
of  reaching  a  much  higher  plane  of  civilization." 

The  existence  of  this  feeling  of  caution  is  no  doubt 
responsible  for  the  fact  that  although  the  West  African 
trade  dates  back  "to  the  days  when  the  exports  from  that 
country  consisted  of  slaves  shipped  by  Liverpool  traders  to 


EXTERNAL  TRADE  337 

America,"  the  British  produce  exported  to  Africa  in  1896 
amounted  in  vakie  to  only  £819,355,  while  in  the  same  year 
the  English  received  thence  products  to  the  amount  of 
£1,558,804.*  It  is  conceivable  that  a  policy  having  for 
its  object  the  promotion  of  A.frican  industry  might  have 
produced  results  which  would  have  made  a  more  imposing 
showing  in  the  tables  of  statistics,  but  it  must  be  admitted 
that,  viewed  strictly  from  the  standpoint  of  the  man  who 
makes  profit  by  exporting  Hamburg  gin  to  West  Africa 
in  British  bottoms,  it  presents  less  alluring  features  than  his 
own,  which  aims  at  the  retention  of  such  trade  as  has 
already  been  secured,  and  is  decidedly  adverse  to  any 
plan  which  even  remotely  encourages  competition.  Captain 
Lugard  in  his  zeal  has  overlooked  the  fact  that  the  promo- 
tion of  the  industrial  habit  and  the  development  of  the  germ 
of  intelligence  is  fatal  to  monopoly,  but  the  British  trader 
would  never  lose  sight  of  the  possibility  of  an  industrious 
people  making  their  own  gin,  and  that  the  conversion  of 
savages  into  civilized  workers  might  lessen  the  taste  for 
the  senseless  gimcracks  and  tawdry  "Brummagen"  ware 
which  constitutes  the  chief  part  of  the  remainder  of  the 
shipments  from  British  ports  to  Africa. 

The  writer  quoted  thinks  that  it  is  well  worth  the  while 
of  the  British  to  resort  to  artificial  methods  for  the  exten- 
sion of  African  trade  and  quotes  approvingly  from  a  speech 
by  the  Rt.  Hon.  Joseph  Chamberlain  in  which  he  said :  "I 
regard  many  of  our  colonies  as  being  in  the  condition  of 
undeveloped  estates  which  can  never  be  developed  without 
imperial  assistance.  *  *  *  j  shall  be  prepared  to  con- 
sider very  carefully  myself,  and  then  if  I  am  satisfied,  to 
confidently  submit  to  the  House,  any  case  which  may  occur 
in  which  by  the  judicious  investment  of  British  money  those 
estates  which  belong  to  the  British  crown  may  be  developed 
for  the  benefit  of  their  population  and  for  the  benefit  of 


♦Statesman's  Year  Book,   1897. 


338  I'ROTECTION   AND   PROGRESS 

the  greater  population  which  is  outside."*  It  is  not  neces- 
sary here  to  point  out  that  the  pohcy  outhned  by  Cham- 
berlain and  applauded  by  Captain  Lugard  is  a  wide  departure 
from  the  principles  advocated  by  Cobden.  It  may  be  true, 
as  the  Captain  remarks,  that  "he  who  acquires  an  estate 
does  not  suppose  that  his  cattle,  his  grain,  his  timber  or 
his  garden  produce  will  come  to  market  without  capital 
outlay  in  stock,  in  buildings,  in  roads  and  in  supervizing 
establishments,"  but  Mr.  Cobden,  and  a  long  line  of  free 
traders  following  him,  have  denounced  as  false  economy 
the  extension  of  artificial  aid  to  trade,  which,  they  assert, 
should  develop  itself  simply  and  naturally,  because  other- 
wise it  cannot  prove  profitable.  Captain  Lugard  says  that 
"the  acquisition  of  new  markets  in  Africa  means  *  *  * 
an  initial  outlay,  an  initial  burden  (so  small,  however,  as 
to  be  almost  inappreciable)  on  the  British  taxpayer,"  but 
no  matter  how  small  the  burden  may  be  its  imposition  is  as 
wide  a  deviation  from  the  teachings  of  Cobden  as  the  laying 
of  a  protective  tariff,  which,  it  is  urged,  promotes  the  injus- 
tice of  imposing  a  tax  on  one  portion  of  the  community  to  ad- 
vance the  interests  of  the  other.  The  farmer,  say  the  free 
traders,  is  called  upon  to  pay  a  tax  to  help  the  manufacturer 
in  protectionist  countries,  but  Captain  Lugard  and  Mr.  Cham- 
berlain do  not  hesitate  to  admit  that  the  British  markets  in 
Africa  can  only  be  extended  by  compelling  the  British 
employer,  whether  a  farmer,  a  shopkeeper  or  a  man  living 
on  his  income,  to  contribute  to  the  bringing  about  of  a 
result  in  which  he  has  no  direct  interest. 

It  is  doubtful,  however,  whether  the  burden  imposed 
on  the  taxpayers  of  England  for  this  purpose  is  as  light  a 
one  as  Captain  Lugard  and  other  students  of  the  problem  of 
the  extension  of  British  trade  assume.  Mallock  has  a 
clearer  apprehension  of  the  matter,  for  he  tells  us  that 
"the  processes  of  production  and  commerce  are  the  central 
processes   of   every   nation's   life,"   and   that   "government 

♦Debate  on  Colonial  Office,  Aug.  22,   1895. 


EXTERNAL  TRADE  339 

exists  to  foster  them,  and  changes  its  form  as  these  processes 
develop,  while  fleets  and  armies  exist  mainly  for  their  pro- 
tection, and  more  and  more  depend  on  the  progress  that 
takes  place  in  them."*  There  can  be  no  doubt  about  the 
correctness  of  this  observation.  In  loose  conversation,  or 
military  treatises,  or  even  in  addressing  constituencies,  it 
may  be  permissible  to  speak  of  maintaining  armies  and  navies 
for  defense,  but  the  rational  economist,  who  recognizes  the 
aggressive  character  of  commercial  peoples,  knows  that  they 
are  cheerfully  supported  because  they  are  believed  to  be 
essential  to  the  continuance  of  that  progress  which  must  be 
kept  up  if  national  decay  is  to  be  averted. 

Mill  pointed  out  nearly  fifty  years  ago  that  the  profits 
of  capital  in  E«igland  were  tending  to  a  minimum  and 
that  "all  the  savings  which  take  place  (beyond  what  im- 
provements tending  lo  the  cheapening  of  necessaries  make 
room  for)  are  either  sent  abroad  for  investment  or  period- 
ically swept  away."t  He  also  directed  attention  to  the 
condition  of  Holland,  where  the  earnings  of  capita'  had 
fallen  so  low  that  those  who  owned  it  had  the  greater  part 
of  their  fortunes  invested  in  loans  and  joint  stock  specula- 
tions of  other  countries,  and  explained  that  they  were 
compelled  to  this  course  by  the  heavy  taxation  in  Holland, 
"which  had  been  in  some  measure  forced  on  her  by  the 
circumstances  of  her  position  and  history." t 

There  is  no  doubt  that  the  British  people  perceive  the 
truth  of  these  teachings  and  recognize  the  oppositeness  of 
the  illustration  furnished  by  Mill.  Therefore  they  cheer- 
fully bear  an  economic  burden  which  increases  vear  by  year. 
During  the  twelve  months  ending  March  31,  1896,  the  cost 
of  the  British  army  was  £18460,000  and  that  of  the  navy 
£19,724,000.  The  budget  for  the  ensuing  fiscal  year  in- 
creased the  latter  appropriation  to  £21,823,000.    In  addition 

♦Mallock,  Aristocracy  and  Evolution,  p.  156. 

fMill,  Principles  of  Political  Economy,  Book  V,  Chap.  IV. 

J  Ibid,  Book  V,  Chap.  VII. 


340         PROTECTION   AND   PROGRESS 

to  this  enormous  expenditure  there  is  the  charge  for  the 
national  debt,  mainly  created  for  the  purpose  of  protecting 
and  extending  trade  which  amounts  to  £25,000,000.  This 
makes  a  total  of  nearly  £65,000,000  expended  for  the  pro- 
tection and  promotion  of  what  Mallock  terms  the  "central 
processes  of  a  nation's  life,"  that  is,  the  processes  of  pro- 
duction and  commerce.* 

Captain  Lugard  speaks  of  this  investment,  or  rather 
burden,  of  the  British  taxpayer  as  a  slight  one,  but  as  it 
represents  an  expenditure  of  over  three-fifths  of  the  national 
revenue  derived  from  taxation  it  may  be  fairly  urged  that 
he  misstates  the  case.  But  while  it  may  be  interesting  to 
expose  his  error  in  order  to  exhibit  the  inconsistency  of 
those  who  claim  that  British  "free  trade"  requires  no 
artificial  stimulus,  we  are  mainly  concerned  here  to  inquire 
whether  this  enormous  expenditure  made  for  the  purpose  of 
extending  British  markets  and  preserving  British  trade 
after  it  has  been  secured  will  prove  profitable  in  the  long 
run.  An  inquiry  of  this  kind  cannot  be  limited  to  the 
operations  of  a  few  years  or  a  century,  or  of  two  or  three 
centuries.  If  the  study  of  political  economy  is  to  prove  of 
any  use  to  mankind  it  must  not  be  fettered,  or  its  teachings 
rendered  valueless  by  the  introduction  of  illustrations  which 
are  incomplete  and  therefore  misleading.  The  student  must 
not  deceive  himself  by  regarding  the  phenomenon  of  the 
wonderful  acquisition  of  wealth  by  the  inhabitants  of  a 
couple  of  islands  of  contracted  area  and  assume  that  it 
represents  the  operations  of  the  principle  of  laissez  faire. 
The  accumulations  of  Great  Britain  are  the  direct  outcome 
of  a  protective  system  which  while  in  operation  called  into 
existence  an  enormous  manufacturing  industry  and  created 
a  capital  of  such  magnitude  that  for  a  time  rival  nations  were 
placed  at  a  disadvantage  by  its  employment.  This  was 
especially  the  case   while  the  expansion  due  to  the  gold 

*Statesman's  Year  Book,  1897. 


EXTERNAL  TRADE  341 

discoveries  made  about  the  middle  of  the  century  was  in 
progress.  What  was  then  gained  is  now  being  preserved 
with  difficulty  by  an  expenditure  of  three-fifths  of  the 
annual  revenue  of  the  state. 

The  question  to  consider,  then,  is  whether  a  continuance 
of  these  expenditures  will  serve  to  maintain  British  com- 
mercial supremacy  or  whether  its  final  result  will  not  be 
to  place  Great  Britain   in  the  position  of  Holland.     Mill 
distinctly  tells  us  that  heavy  taxation  forced  on  that  country 
by  the  circumstances  of  her  position  and  history  has  driven 
the  owners  of  Dutch  capital  to  make  investments  in  foreign 
bonds  rather  than  their  own.     It  is  not  improbable  that 
the  unnatural  effort  of  the  British  to  open  new  markets 
and  retain  them  will  ultimately  bring  about  a  similar  con- 
dition of  afifairs  in  Great  Britain  to  that  which  prevails  in 
Holland.     At  present  the  people  of  the  United  Kingdom 
bear  the  burden  of  taxation  with  apparent  ease,  but  who  can 
tell  what  would  follow  should  another  great  war  be  waged 
for  the  purpose  of  extending  or  preserving  trade?     The 
signs  of  such  a  conflict  are   multiplying.     Quite   recently 
assertions   were   officially  made   that   Great   Britain   would 
not  tolerate  the  partition  of  China  and  a  warning  was  given 
that  the  occupation  of  Port  Arthur  by  the  Russians  would 
not  be  permitted.     It  is  true  that  the  failure  of  Russia  to 
heed  the  warning  did  not  provoke  action,  but  it  would  be 
unwise  to  assume  on  that  account  that  Great  Britain  will 
always  shrink  from  making  good  her  threats.     At  any  day 
the  pressure  of  her  commercial  classes  and  the  necessity 
of  redeeming  herself  from  the  charge  of  pusillanimity  so 
freely  brought  by  her  own  writers,  may  force  her  to  throw 
down  the  gage  of  battle,  or  she  may  be  obliged  to  accept 
it  from  the  nations  which,  like  her,  are  eagerly  struggling 
for  the  markets  of  the  world. 

The  outcome  of  such  a  conflict  would  certainly  prove 
disastrous  to  Great  Britain.  It  is  inconceivable  that  she 
could   engage   in  a  struggle  with  the  continental  powers 


34^         PROTECTION   AND   PROGRESS 

with  the  hope  of  such  a  termination  as  that  which  signalized 
the  war  between  Germany  and  France.  Great  Britain  might 
be  able  to  hold  her  own  in  such  a  war,  and  with  the  assistance 
of  a  powerful  ally  or  allies  might  win  an  effective  victory, 
but  she  could  not  secure  indemnity  for  her  expenditures 
and  the  loss  of  her  commerce.  Under  the  most  favorable 
circumstances  she  might  escape  the  loss  of  territory,  but 
that  is  doubtful.  The  net  result  of  such  a  collision  might 
easily  be  an  addition  to  the  national  debt  which  would 
double  the  annual  interest  charge,  and,  unless  the  very 
unlikely  contingency  of  a  general  disarmament  occurred, 
the  years  following  the  conclusion  of  peace  might  demand 
much  larger  expenditures  for  military  and  naval  purposes 
than  were  required  during  the  period  preceding  war. 

While  some  people  entertain  the  foolish  idea  that  a  national 
debt  is  a  national  blessing,  and  short-sighted  men  professing 
a  knowledge  of  statesmanship  have  held  that  so  long  as 
a  debt  is  owned  by  the  people  of  the  nation  contracting  it 
no  economic  loss  results,  there  are  others  who  plainly  per- 
ceive that  the  effect  of  piling  up  indebtedness  is  to  make 
it  more  and  more  difficult  for  an  industrial  nation  to  com- 
pete with  rivals  more  favorably  situated  so  far  as  accessi- 
bility to  raw  materials  and  exemption  from  heavy  taxation 
are  concerned.  Especially  must  this  be  true  of  a  country 
situated  as  Great  Britain  is.  The  limited  area  of  the 
islands  and  the  comparative  meagerness  of  resources  makes 
her  case  present  a  close  analogy  to  that  of  Holland.  Already 
we  have  significant  signs  in  Great  Britain  of  the  tendency 
commented  upon  by  Mill  as  being  manifested  by  the  Dutch. 
Vast  quantities  of  the  capital  of  the  British  have  been 
invested  in  foreign  lands,  and  the  obvious  reason  why  its 
owners  resort  to  strange  fields  to  place  their  accumulations 
is  that  they  cannot  secure  satisfactory  profits  at  home. 

At  one  time  the  outside  investments  of  the  British  may 
have  represented  a  desire  for  a  greater  degree  of  profit  than 
could  be  obtained  at  home,  but  this  is  no  longer  the  case. 


EXTERNAL  TRADE  343 

It  is  now  clearly  apparent  that  much  British  capital  seeks 
investment  abroad  because  it  cannot  find  domestic  employ- 
ment. This  is  not  owing  to  the  too  rapid  expansion  of  cap- 
ital, but  is  directly  traceable  to  the  failure  of  British  industry 
to  develop  as  steadily  as  it  must  in  order  to  preserve  the 
commercial  standing  of  the  nation.  Or,  ro  put  it  in  the 
more  significant  fashion  of  an  English  review  writer,  it 
is  ceasing  to  be  profitable  to  employ  capital  in  what  were 
once  the  leading  British  industries  because  a  combination 
of  circumstances  makes  it  possible  for  rivals  to  manufatcure 
more  cheaply,  or,  at  least,  enables  them  to  hold  their  own 
territory  against  the  entrance  of  the  manufactures  of  Great 
Britain.  As  an  instance  in  point  he  cited  that  the  population 
of  Lancashire  was  increasing  at  the  rate  of  2|  per  cent,  per 
annum,  and  that  the  operatives  employed  in  the  cotton 
mills  of  the  district  during  a  period  of  twelve  years  ending 
in  1895  had  only  increased  44  per  cent.  "Therefore,"  he 
added,  "the  population  of  Lancashire  has  been  increased 
five  times  as  rapidly  as  the  chance  of  employment  in  the 
main  industry  of  the  country,"  and,  with  equal  force,  he 
might  have  added  that  the  opportunities  for  investment  of 
British  capital  in  the  great  cotton  textile  industry  have 
been  abridged  in  a  ratio  corresponding  to  its  almost  stagnant 
condition  in  the  greatest  British  cotton  spinning  and  weaving 
center.* 

That  this  evil  will  become  more  intense  as  the  years  move 
on  and  other  peoples  now  but  indififerently  endowed  with 
mechanical  ability  develop  their  faculties  no  sensible  person 
will  venture  to  deny.  The  experience  of  the  past,  although 
its  lessons  have  been  somewhat  obscured  by  extraneous 
circumstances,  permits  no  other  conclusion.  It  is  not  neces- 
sary in  assenting  to  this  view  to  concede  the  correctness 
of  the  elaborated  theory  that  luxury  and  corruption  tend 
to  enervation  and  make  peoples  who  have  accumulated  great 


♦Hallett,  New  British  Markets.  Nineteenth  Century,  August,  1895. 


344         PROTECTION   AND   PROGRESS 

wealth  incapable  of  competing  with  newer  and  more  hardy 
nations.  It  would  not  be  difficult  to  institute  comparisons 
which  would  convey  the  impression  that  the  condition  of 
modern  England  presents  a  surprising  resemblance  to  that 
of  ancient  Carthage  and  Rome  in  their  periods  of  decadence. 
All  the  symptoms  which  learned  writers  say  indicated  the 
mortal  disease  of  those  ancient  bodies  politic  may  be  dis- 
cerned in  Great  Britain  to-day ;  yet  a  careful  writer  would 
hesitate  to  admit,  even  though  he  felt  assured  that  the 
British  will  share  the  fate  of  other  empires  that  have 
preceded  it,  that  the  cause  of  its  undoing  will  be  due  to  its 
departure  from  the  paths  of  virtue,  using  the  word  in  its 
broader  Aristotilean  as  well  as  in  its  more  contracted  ethical 
sense.  Confronted  by  the  possibility  of  a  people  hitherto 
regarded  as  barbarians  creating  an  industrial  empire  which 
may  by  the  mere  force  of  competition  and  superior  resources 
overwhelm  the  hitherto  prosperous  British  with  disaster, 
it  would  be  little  less  than  absurd  to  attribute  the  result 
to  the  moral  decay  of  Englishmen  or  the  superior  virtue  of 
their  Russian  rivals. 

All  the  evidence  we  have  shows  that  the  people  of  Russia 
are  marching  steadily  toward  the  goal  of  industrial  per- 
fection. It  is  not  necessary  in  this  place  to  mass  the  testi- 
mony foreshadowing  such  a  result.  Much  has  been  saicl 
elsewhere  in  these  pages  which  will  convince  the  most 
incredulous  that  the  Russian  empire  is  making  enormous 
strides,  and  that  its  present  polity,  although  the  mailed  hand 
is  used  in  carrying  it  out,  is  to  advance  the  material  inter- 
ests of  the  people  by  extending  their  operations  in  the  fields 
of  agriculture,  manufacture  and  commerce.  If,  as  seems 
more  than  likely,  the  effect  of  these  efforts  will  be  to  close 
the  markets  in  Russia  and  the  Orient  hitherto  enjoyed  by  the 
manufacturers  of  Great  Britain  who  will  say  the  success 
achieved  was  due  to  superior  Russian  morality,  intelligence 
and  greater  devotion  to  liberty?  Will  some  future  Gibbon, 
if  the  British  islands  cease  to  maintain  a  great  population — • 


EXTERNAL  TRADE  345 

a  possibility  freely  conceded  by  Mallock  and  others — assert 
that  the  diminution  of  the  number  of  inhabitants  was  due 
to  their  failure  to  appreciate  the  blessings  of  freedom,  and 
glorify  the  rise  and  progress  of  the  Muscovite  as  a  triumph 
of  the  principles  of  free  government? 

We  may  safely  answer,  No !  A  more  rational  interpreta- 
tion of  the  causes  which  contribute  to  the  growth  and  decline 
of  nations  will  forbid  the  most  limited  intelligence  to  accept 
so  erroneous  a  view.  In  the  future,  after  this  mighty  change 
has  occurred,  it  will  be  clearly  perceived  that  the  temporary 
greatness  of  Britain  was  chiefly  due  to  the  failure  of  other 
peoples  to  employ  the  faculties  with  which  they  were 
endowed,  and  that  a  period  was  put  to  the  power  and 
prosperity  of  the  empire  as  soon  as  rivals  discovered  their 
latent  possibilities.  A  discovery  of  that  character,  associ- 
ated with  the  desire  to  make  the  most  of  their  previously 
unexploited  resources,  will  account  more  satisfactorily  to 
the  historian  of  the  future  for  the  forward  movement  of 
certain  nations  than  theories  of  the  effects  of  freedom  and 
the  practice  of  morality.  If  the  anticipated  expansion  of 
the  Russian  Empire  foreshadowed  by  its  present  industrial 
progress  occurs  it  will  be  impossible  to  attribute  the  devel- 
opment to  any  such  fanciful  causes  as  the  historians  of  the 
old  school  advance  to  explain  the  decay  of  nations.  We 
know  that  freedom  is  not  a  conspicuous  possession  of  the 
Russians,  and  few  Anglo-Saxons  will  concede  that  the 
standard  of  morals  is  higher  in  the  dominions  of  the  Czar 
than  in  the  Western  nations  which  have  hitherto  been  in 
the  van  of  civilization.  There  may  be  much  exaggeration 
in  the  widespread  statements  regarding  corruption  in  official 
and  private  life  in  Russia,  but  there  is  enough  basis  of  truth 
in  them  to  account  for  the  consensus  of  opinion  that  many 
reforms  will  have  to  be  made  before  the  Russian  people 
can  be  placed  on  the  same  plane  as  those  now  pleased  to  look 
upon  them  as  barbarians. 

This  being  the  case,  historian  and  economist  alike,  when 


346         PROTECTION   AND   PROGRESS 

they  study  the  phenomenon  of  the  decadence  of  the  leading 
commercial  empire  of  to-day,  will  find  no  difficulty  in 
arriving  at  a  correct  conclusion  respecting  the  cause.  They 
will  not  hesitate  to  attribute  it  to  the  inability  of  a  people, 
no  matter  how  much  their  intelligence  may  have  been  devel- 
oped, to  contend  indefinitely  with  superior  resources.  They 
will  see  the  vanity  of  the  attempt  to  maintain  an  adventi- 
tious position  by  piling  up  taxation.  The  schoolboy  of  the 
future  will  look  back  with  derision  on  the  efifort — and  the 
system  of  political  economy  which  instigated  it — of  a  people 
to  convince  other  peoples  that  it  is  wise  to  expend  the  greater 
part  of  the  energy  of  mankind  in  the  wasteful  work  of 
unnecessary  hauling.  One  day  the  fact  that  nations  could 
be  persuaded  that  they  would  be  benefited  by  neglecting  to 
develop  their  resources  will  seem  as  strange  as  it  now  seems 
to  us  that  the  ancients  should  have  approached  so  near  to 
the  discovery  of  the  great  scientific  truths  which  have  revo- 
lutionized the  modern  world  without  actually  grasping  them. 
To  those  taking  the  backward  view  it  will  seem  extraordinary 
that  the  idea  should  have  been  seriously  entertained  that  the 
hiandicap  of  excessive  taxation  could  assist  in  a  race  for 
commercial  supremacy,  and  the  fatuity  of  those  who  imagine 
that  the  piling  up  of  billions  of  debt  in  commercial  wars 
could  prove  more  than  a  temporary  advantage  in  a  rivalry 
of  the  whole  world  will  be  a  source  of  wonderment. 

P»y  students  of  the  future  the  belief  in  illimitable  foreign 
markets  will  be  regarded  as  an  extraordinary  delusion. 
They  will  clearly  see  what  some  now  perceive — that  the 
demands  of  consumers  are  democratic  and  always  in  re- 
sponse to  the  desires  of  the  masses.  If  the  masses  in  any 
country  remain  in  a  state  of  dependence  the  standard  of  life 
v.ill  be  low  and  the  volume  of  consumption  small.  Mr. 
Mallock  states  the  case  accurately  when  he  says  :  "Not  every 
member  of  the  community  demands  the  same  commodities, 
but  v.hatever  commodities  are  demanded  are  demanded  in 
each  case  in  accordance  with  the  spontaneous  wishes  of  indi- 


EXTERNAL  TRADE  347 

viduals,  and  that  the  total  force  of  the  demand  is  the  cumula- 
tive result  of  a  number  of  actions  and  desires  which  happen 
to  be  spontaneously  similar.  The  commodities  supplied  to 
them  have,  in  other  words,  to  be  accommodated  to  a  gen- 
uinely democratic  order ;  and  if  the  consuming  democracy 
does  not  cosider  them  suitable,  it  virtually,  by  refusing  to  buy 
them,  condemns  them  to  be  destroyed."* 

This  being  indisputable,  it  must  be  apparent  that  so  long 
as  peoples  are  in  a  state  of  dependence  their  demand,  except 
for  the  simplest  products,  must  remain  at  a  minimum.  It 
is  hopeless  to  expect  Africans  to  increase  their  appreciation 
for  the  many  articles  which  most  civilized  peoples  regard 
as  indispensable  to  a  comfortable  existence  so  long  as  they 
consent  to  receive  from  "Brummangen"  traders  gin,  glass 
beads  and  coarse  cotton  cloths.  Until  they  are  taught  the 
arts  of  industry  and  are  stimulated  to  desire  a  large  number 
of  useful  as  well  as  unessential  things  their  taste  will  remain 
at  the  glass-bead  level  and  the  demand  for  general  products 
will  be  low. 

As  has  already  been  suggested,  the  broadening  of  tastes 
of  people  in  a  backward  state  is  attended  with  the  menace 
of  a  curtailment  of  a  certain  kind  of  markets ;  therefore 
it  is  not  encouraged.  But  in  spite  of  this  the  impulse  even 
in  "barbarian"  countries  is  toward  an  enlargement  of  wants. 
and  it  is  always  accompanied  by  an  effort  to  meet  them  by 
home  industry.  It  is  inconceivable  that  a  community  could 
have  as  highly  developed  tastes  as  those  exhibited  by 
Frenchmen,  Americans,  Germans  and  Englishmen  without  a 
domestic  industry  responding  to  them.  Therefore,  we  may 
look  forward  to  a  period  when  all  peoples  with  a  capacity 
for  self-improvement  will  struggle  to  diversify  their  indus- 
tries. It  is  in  the  highest  degree  probable  that  the  introduc- 
tion to  the  notice  of  the  Orientals  of  railroads,  factories 
and  modern  methods  of  extracting  minerals  will  be  followed 

♦Mallock,   Aristocracy   and    Evolution,    p.    241. 


348         PROTECTION   AND   PROGRESS 

by  a  reawakening  of  the  nations  of  the  East,  and  the  final 
result  will  be  to  completely  alter  the  character  of  the  ex- 
changes between  that  part  of  the  world  and  the  West. 

In  the  next  chapter  an  attempt  will  be  made  to  determine 
the  imminence  and  possible  extent  of  the  change  which  may 
be  produced  by  such  an  Oriental  awakening.  It  will  be 
seen  from  the  nature  of  the  evidence  to  be  presented  that 
the  Western  world  must  abandon  the  hope  of  greatly  extend- 
ing markets  for  manufactured  products  in  that  direction 
and  that  there  is  a  menace  of  near  at  hand  rivalry  which 
may  dispute  with  the  West  for  the  comparatively  insignifi- 
cant markets  that  will  be  afforded  by  uncivilized  Africans 
and  others  who  have  thus  far  failed  to  develop  industrial 
tendencies. 


CHAPTER  XVI. 

INDUSTRIALISM   IN   ASIA. 

MANUFACTURING    CAPABILITY    OF    ORIENTAL    PEOPLES    CON- 
SIDERED. 

Why  some  economists  disregard  the  dangers  of  Asiatic  competition 
— A  comfortable  theory  which  would  divest  economics  of  all 
problematical  features — Any  considerable  output  of  cotton  fab- 
rics by  Japan  will  injure  the  Western  cotton  industry — The  de- 
struction of  established  industries  by  fresh  competitors — Com- 
petition which  results  in  destroying  established  industries  im- 
pairs the  ability  to  consume — The  promotion  of  superfluous  in- 
dustrial enterprises — Excessive  competition  leads  to  the  dissipa- 
tion of  capital — Adam  Smith's  prediction  that  industrial  joint 
stock  enterprises  would  not  work  successfully — The  forerun- 
ners of  the  modern  trust  in  Ancient  Rome — Automatic  accu- 
mulation of  capital — The  part  accumulated  capital  may  play  in 
promoting  Oriental  industry — The  blackmailing  propensity  of 
accumulated  capital — Excessive  thrift  an  obstacle  to  modern 
progress — The  imitator  in  an  industrial  contest  often  reaps  the 
fruits — The  inventive  faculty  likely  to  be  developed  in  Oriental 
countries — Cheap  labor  in  abundance  may  result  in  industrial 
retrogression — An  awakening  that  may  prove  more  speedy  than 
that  which  followed  the  crusades — The  effects  of  the  transfer- 
ence of  Western  capital  to  the  Orient  . 

In  concluding  the  chapter  devoted  to  showing  the  fal- 
lacy underlying  the  Cobdenistic  theory  that  the  markets 
of  the  world  are  capable  of  indefinite  expansion  reference 
was  made  to  the  probable  effect  that  the  introduction  of 
Western  methods  among  Oriental  peoples  would  have  upon 
the  future  of  industry.  The  theoretical  economists  have 
hitherto  been  disposed  to  regard  with  contempt  the  fears 

349 


350         PROTECTION  AND  PROGRESS 

of  those  who  look  forward  to  the  time  when  the  teeming 
milHons  of  India,  China  and  Japan  will  attempt  to  rival 
Western  peoples  in  the  arts  which  the  latter  are  now  en- 
gaged in  teaching  the  former.  An  American  writer  of 
large  practical  experience,  whose  ideas  scarcely  harmonize 
with  the  results  of  his  observations,  has  put  into  concrete 
form  in  a  magazine  article  the  view  of  the  class  who  think 
that  there  is  no  ground  for  the  apprehension  of  trouble 
from  this  source.  He  assumed  that  any  progress  which 
may  be  made  in  the  direction  of  the  acquirement  of  the 
knowledge  and  arts  of  the  West  by  Orientals  would  be 
accompanied  by  a  corresponding  increase  in  the  desires 
of  the  newly  awakened  peoples  which  would  display  itself 
in  a  greatly  increased  consumptive  ability. 

Speaking  of  the  Japanese,  he  said:  "In  their  individual 
aspect  human  wants  came  into  existence  with  the  capacity 
•for  gratifying  them.  That  the  cost  of  living  increases  to 
each  individual  as  his  fortune  rises  is  a  fact  within  the 
observation  and  experience  of  every  man.  This  could  not 
be  otherwise.  Men  strive  for  the  possession  of  material 
things  only  because  they  desire  to  possess  them,  and  that 
desire  for  possession  is  founded  upon  an  inherent  desire 
to  expand,  exalt  and  embellish  individual  life.  The  sole 
object  for  which  men  produce  an  article  of  commerce  is 
for  the  purpose  of  exchanging  it  for  other  articles  adapted 
for  their  wants.  They  produce  that  they  may  sell  and 
they  buy  because  they  consume.  At  the  basis  of  all  indus- 
try lies  the  individual  want  of  man.  As  the  desires  of  his 
mind  expand  his  effort  expands  correspondingly.  Thus 
the  energy  of  the  individual  rises  proportionately  to  the  di- 
versity of  the  want.  In  fact,  the  want  his  mind  perceives 
is  the  actual  parent  of  his  productive  capacity.  To  assume 
that  a  race  of  men  will  become  producers  of  wealth  on  a 
very  large  scale  without  becoming  consumers  on  a  cor- 
respondingly increased  scale  is  to  attribute  to  them  the  stol- 
idity of  a  purpose  to  become  rich  without  any  correspond- 


INDUSTRIALISM   IN  ASIA  351 

ing  personal  benefit  to  themselves.  If  contact  with  the 
nations  possessing  higher  civilized  efficiency  is  to  have  no 
other  effect  upon  Japan  than  to  increase  its  productive 
capacity  without  enriching  or  diversifying  the  civilized  want 
of  that  people,  then  the  Japanese  must  be  regarded  as  the 
most  stolid,  unimaginative  and  stupid  of  all  the  races  of 
men."* 

The  writer  foresaw  that  this  view  might  be  attacked 
as  a  generalization,  but  he  contended  that  it  had  a  substan- 
tial basis  in  fact  and  in  the  experience  of  each  individual, 
and  that  it  is  consistent  with  the  philosophy  of  human 
life,  human  aspiration  and  human  desire.  It  is  open,  how- 
ever, to  the  objection  that  it  ignores  the  fundamental  fact 
that  as  society  is  now  constituted  there  is  a  constant  ten- 
dency to  overproduction,  and  that  the  result  of  this  tendency 
is  to  create  fierce  commercial  rivalry,  the  too  frequent  out- 
come of  which  is  to  arrest,  and  in  many  instances  totally 
impair,  the  ability  of  localities  or  peoples  to  maintain  their 
customary  rate  of  progress,  and  that  it  often  eventuates 
in  the  complete  submergence  of  once  prosperous  communi- 
ties. 

If  it  were  true,  as  Mr.  Mills  assumes,  that  the  ability 
to  create  wealth  is  matched  by  the  ability  to  effectively  con- 
sume there  would  be  no  problem  for  modern  economists 
to  consider.  Such  an  assumption  implies  the  existence  of 
a  continuous  commercial  prosperity,  whereas  the  reverse 
is  the  case.  Instead  of  it  being  true  that  increased  pow- 
ers of  productivity  bring  about  an  equilibrium  between 
demand  and  supply,  we  find  that  the  latter  is  constantly 
outstripping  the  former,  and  that  as  the  decades  roll  on 
the  so-called  periods  of  depression  follow  each  other  more 
closely,  last  longer  and  grow  more  acute. 

If  this  were  not  the  case  we  might  view  with  equanimity 
the  creation  of  new  industries  in  Japan.     If  the  assumption 

♦Mills,  Japanese  Industries,  Overland  Monthly,  June,  1896. 


J52  PROTECTION   AND   PROGRESS 

that  "a  race  of  men,  when  tliey  become  producers  on  a 
large  scale,  at  once  become  consumers  on  a  correspondingly 
increased  scale"  were  perfectly  sound  and  we  could  be 
assured  that  there  would  be  no  serious  dislocation  of  the 
existing  machinery  of  production  there  would  be  no  ground 
for  apprehension.  But  the  least  informed  person  is  aware 
that  this  is  not  the  case.  Take  a  concrete  example  fur- 
nished by  the  Japanese.  It  will  be  impossible  for  Japan, 
in  the  present  condition  of  the  cotton  manufacturing  industry 
in  the  Western  world,  to  greatly  increase  her  output  of 
textile  fabrics  without  seriously  injuring  the  plants  already 
in  existence  in  Europe  and  America. 

The  Cobdenistic  idea  that  new  outlets  for  manufactured 
goods  can  easily  be  found  is  no  longer  tenable.  It  has 
been  absolutely  abandoned  by  thoughtful  English  writers, 
who,  while  still  maintaining  that  the  free  trade  system  is 
adapted  to  the  needs  of  Great  Britain,  are  too  frank  to 
conceal  the  fact  that  at  present  there  is  no  hope  of  adjust- 
ing the  machinery  of  production  so  that  it  will  always  run 
as  smoothly  as  the  theorists  assume  it  does.  A  prominent 
member  of  this  new  and  more  rational  school  of  British 
economists  remarks:  "It  is  at  any  rate  conceivable  that 
Japan  might  undersell  England  in  the  East,  and  Germany 
undersell  it  in  the  West,  and  that  the  present  depression 
in  agriculture  might  extend  to  manufactures.  The  gen- 
eral assumption  that  if  trade  is  driven  from  one  market  it 
can  flee  to  another  is  only  partially  true  in  practice,  and 
an  industry  may  be  destroyed  before  the  labor  and  capital 
can  find  another  outlet."*  He  also  says  in  the  same  con- 
nection that  "a  country  with  a  large  carrying  trade  may 
l)e  injured  by  the  development  of  foreign  shipping  or  by 
the  conversion  of  roundabout  into  direct  trade,"  an  obser- 
vation no  American  who  has  witnessed  the  absorption  by 
Great  Britain  of  the  ocean  carrying  trade  of  the  United 
States  will  care  to  dispute. 

♦Nicholson,  Principles  of  Political   Economy,   Vol.  II,  p.  326. 


INDUSTRIALISM   IN  ASIA  353 

In  the  discussion  of  a  practical  question  of  this  kind 
the  sophistries  of  the  school  of  economists  who  attempt 
to  convey  the  impression  that  the  welfare  of  the  whole  of 
mankind  is  to  be  considered  should  be  totally  ignored.  No 
good  result  can  flow  from  the  practice  of  shutting  our  eyes 
to  the  fact  that  there  are  national  boundaries  and  that  the 
national  feeling  is  increasing  rather  than  diminishing.  No 
sane  American  will  assent  to  the  proposition  that  because 
the  aggregate  wealth  of  the  world  is  likely  to  be  increased 
by  the  productivity  of  the  Orientals  he  is  certain  to  be 
benefited.  There  are  too  many  chances  that  in  the  shak- 
ing up  of  the  atoms  he  may  be  the  loser. 

It  is  too  late  to  teach  the  exploded  doctrine  that  it  makes 
no  difference  to  a  people  whether  they  do  or  do  not  pro- 
duce the  manufactured  articles  which  they  consume,  pro- 
vided they  are  easily  and  cheaply  obtained.  Experience  has 
taught  us  that  consumption  on  a  large  scale  only  takes 
place  in  those  countries  where  industries  are  well  diversi- 
fied, and  the  inference  is  obvious  that  if  the  existence  of 
those  we  have  created  should  be  jeopardized  by  the  compe- 
tition of  peoples  whose  habits  of  thrift,  the  result  of  cen- 
turies of  enforced  abstinence,  Vk'ould  enable  them  to  manu- 
facture more  cheaply  than  we  can,  the  ability  of  the  Ameri- 
can people  to  effectively  consume  would  speedily  decline. 

But  the  theory  under  criticism  is  not  alone  defective  in 
assuming  that  the  evil  of  overproduction  is  non-existent. 
It  halts  very  seriously  in  another  particular.  Mr.  Mills 
is  certainly  in  error  when  he  asserts  that  "the  sole  object 
for  which  men  produce  any  article  of  commerce  is  for  the 
purpose  of  exchanging  it  for  other  articles  adapted  to  their 
wants.  They  produce  that  they  may  sell,"  he  says,  "and 
they  buy  because  they  consume.  At  the  basis  of  all  indus- 
try lies  the  individual  want  of  man." 

As  a  broad  generalization  this  statement  seems  sound 
enough,  but  analysis  will  speedily  disclose  that  it  does  not 
fairly  describe  the  mainspring  of  the  greater  part  of  the 

23 


354         PROTECTION  AND   PROGRESS 

energy  displayed  in  carrying  out  our  extremely  complex 
industrial  system.  Unquestionably  the  moving  impulse  to 
work  with  the  majority  of  men  is  want.  If  the  fruits  of 
the  earth  were  so  distributed  that  men  could  gather  them 
without  effort  it  is  conceivable  that  the  industrial  instinct 
would  entirely  disappear.  But  it  will  hardly  be  asserted 
that  because  the  masses  are  compelled  to  labor  in  order 
to  keep  the  wolf  of  poverty  from  the  door  the  multi-mil- 
lionaire is  impelled  to  add  to  his  millions  by  a  similar  im- 
pulse. Somewhere  or  other  the  statement  has  been  attrib- 
uted to  C.  P.  Huntington  that  his  great  wealth  gave  him 
no  advantage  over  a  person  of  moderate  means.  In  sub- 
stance, he  said :  "I  can  eat  no  more  bread,  meat  and  other 
food,  and  I  can  wear  no  more  clothes  than  the  average 
man;  therefore,  if  I  go  on  accumulating  I  am  doing  it 
for  the  benefit  of  others,  as  I  take  care  to  keep  my  accumu- 
lations productively  employed." 

Few  persons  will  be  found  to  dispute  Mr.  Huntington's 
claim  that  he  does  not  benefit  by  his  continued  exertions 
and  that  when  he  plans  a  new  enterprise  he  is  not  impelled 
to  do  so  by  want.  No  doubt  if  he  were  disposed  to  inac- 
tion he  could  get  as  much  comfort  out  of  tvvfo  or  three  hun- 
dred thousand  dollars  as  he  can  out  of  a  score  of  millions. 
But  he  need  not  be  credited  with  altruistic  motives  because 
he  goes  on  piling  up  wealth  nor  are  we  obliged  to  assume 
that  his  persistent  exertions  must  necessarily  inure  to  the 
benefit  of  his  fellow  creatures. 

We  cannot  lose  sight  of  the  fact  that  the  unscientific 
character  of  modern  competition  results  in  the  creation  of 
many  entirely  unnecessary  and  unsuccessful  industrial  works. 
To  say  that  the  promotion  of  enterprises  of  this  character 
is  beneficial  would  be  as  unreasonable  as  to  claim  that  the 
millionaire  Girard  conferred  a  public  benefit  when  he  em- 
ployed an  applicant  for  charity  in  piling  and  repiling  bricks 
on  the  same  spots.  It  is  true  that  he  transferred  part 
of  his  wealth,  which  he  did  not  need,  to  some  one  who 


INDUSTRIALISM   IN  ASIA  355 

sadly  needed  the  money  earned  in  this  fanciful  manner,  but 
the  carrying  to  and  fro  of  the  bricks  was  a  mere  waste 
of  energy,  for  it  is  more  than  probable  that  the  recipient 
of  the  charity  thus  whimsically  conferred  did  not  need  exer- 
cise. 

In  the  same  way  Mr.  Huntington's  energies  may  have 
been  expended  in  the  creation  of  unnecessary  railroads. 
If,  as  the  result  of  his  enterprise,  two  roads  were  called 
into  existence  where  one  could  easily  have  performed  the 
required  work,  the  world  at  large  was  not  advantaged. 
The  construction  of  the  unnecessary  road  may  have  given 
employment  to  men  who  needed  it  and  its  subsequent  opera- 
tion doubtless  contributed  to  the  alleviation  of  the  suffer- 
ing caused  by  the  constant  competition  for  an  opportunity 
to  earn  a  living,  but  unless  it  can  be  successfully  demon- 
strated that  the  dispersal  of  capital  is  a  desideratum,  no 
one  will  say  that  the  creation  of  unnecessary  transportation 
facilities  is  economical  or  wise. 

It  is  not  desirable  here  to  enlarge  upon  the  evils  flow- 
ing from  the  promotion  of  excessive  competition  in  the  busi- 
ness of  transporting  products  to  and  fro.  Indeed,  it  would 
be  a  mistake  to  single  out  this  particular  industry  for  ani- 
madversion while  the  same  blunder  is  being  committed  in 
every  other  calling  where  the  competitive  system  has  an 
opportunity  to  operate.  It  is  no  worse  a  mistake  to  parallel 
lines  of  railroads  than  it  is  to  multiply  stores  indefinitely. 
Two  trains  of  cars  running  side  by  side  through  a  country 
which  can  scarcely  furnish  enough  business  for  one  may 
afford  a  more  striking  illustration  of  the  evil  we  speak  of, 
but  a  score  of  shoe  shops  in  sight  of  each  other  on  a  single 
street  in  a  city,  all  employing  clerks  whose  occupation  a 
large  part  of  the  time  is  waiting  for  customers  who  do  not 
come,  is  as  pronounced  a  case  of  wasted  energy  as  that 
which  the  parallel  railroads  offer. 

The  point  we  are  seeking  to  make  is  that  the  creation 
of  wealth  under  existing  conditions  is  not  always  followed 


356         PROTECTION   AND   PROGRESS 

by  the  ability  to  consume,  and  that  while  the  highly  unsci- 
entific method  of  promoting  productivity  by  competition 
obtains  it  is  positively  necessary  for  nations,  as  it  is  for 
indivduals,  to  take  steps  to  prevent  being  crowded  out  of 
the  race.  Therefore  it  behooves  the  people  of  the  Western 
world  to  narrowly  watch  the  doings  of  possible  new  com- 
petitors. A  state  has  as  much  reason  to  feel  apprehension 
over  the  advent  of  a  new  manufacturing  nation  as  the  shop- 
keeper has  to  dread  the  opening  of  a  new  establishment 
by  his  side.  The  first  comer  may  be  able  to  hold  his  own 
if  the  progress  of  the  place  in  which  he  is  located  can  sup- 
port an  additional  dealer,  but  if  it  cannot  he  must  divide 
his  profits  with  the  interloper  or  go  to  the  wall. 

That  this  is  the  fate  of  a  large  proportion  of  those  who 
engage  in  business  the  records  of  failure  in  every  coun- 
try testify.  Indeed,  when  this  part  of  the  evidence  is 
closely  studied,  the  conclusion  is  forced  upon  the  candid 
inquirer  that  under  the  present  system,  in  which  accumula- 
tions of  capital  play  so  important  a  part,  it  is  becoming 
more  and  more  difficult  to  achieve  success  by  the  exercise 
of  skill  and  industry.  If  such  a  deduction  may  be  regarded 
as  sound  and  is  accepted  it  will  be  fatal  to  the  assumption 
that  all  attempts  to  increase  the  world's  productivity  must 
result  beneficially.  In  this  view  of  the  case  only  well  directed 
efforts  which  eliminate  the  factor  of  waste  and  respond  to 
ascertained  wants,  immediate  or  prospective,  can  confer  a 
benefit  on  mankind  generally. 

The  writer  we  are  criticising,  like  many  others,  employs 
the  argument  advanced  by  Adam  Smith  when  he  assumed 
that  the  mainspring  of  commercial  energy  is  direct  self- 
interest.  The  fact  is  often  lost  sight  of  that  when  Adam 
Smith  wrote  the  belief  was  prevalent  that  no  business  enter- 
prise could  succeed  unless  the  personal  attention  of  those 
directly  interested  in  its  profits  was  given  to  it.  So  con- 
vinced was  the  learned  doctor  of  the  soundness  of  this 
view  that  he  unhesitatingly  declared  that  joint  stock  com- 


INDUSTRIALISM  IN  ASIA  357 

panics,  except  for  the  conduct  of  the  banking  and  insur- 
ance business,  could  not  prove  successful.  "The  only  trades 
which  it  seems  possible  for  a  joint  stock  company  to  carry 
on  successfully,  without  an  exclusive  privilege,"  he  asserted, 
"are  those  of  which  all  the  operations  are  capable  of  being 
reduced  to  what  is  called  a  routine,  or  to  such  a  uniformity 
of  method  as  admits  of  little  or  no  variation."*  In  another 
place  he  says:  "The  joint  companies  which  are  established 
for  the  public  spirited  purpose  of  promoting  some  particular 
manufacture,  over  and  above  managing  their  own  affairs  ill, 
to  the  diminution  of  the  general  stock  of  the  society,  can  in 
other  respects  scarce  ever  fail  to  do  more  harm  than  good."t 
And  there  was  no  doubt  whatever  in  his  mind  "that  a  joint 
stock  company  would  be  unable  to  carry  on  successfully  any 
branch  of  foreign  trade,  when  private  adventurers  can  come 
into  any  sort  of  open  and  fair  competition  with  them."  J 

These  conclusions,  as  has  already  been  observed,  were 
based  on  the  erroneous  assumption  that  the  managers  of 
other  people's  money  cannot  be  expected  to  watch  over 
it  with  the  same  vigilance  with  which  the  partners  in  pri- 
vate copartnery  watch  over  their  own.  "Like  the  stewards 
of  a  rich  man,"  says  Doctor  Smith,  "they  are  apt  to  con- 
sider attention  to  small  matters  as  not  for  their  master's 
honor,  and  very  easily  give  themselves  a  dispensation  from 
having  it.  Negligence  and  profusion,  therefore,  must  always 
prevail,  more  or  less,  in  the  management  of  the  affairs  of 
such  a  company.  It  is  upon  this  account  that  joint  stock 
companies  for  foreign  trade  have  seldom  been  able  to  main- 
tain the  competition  against  private  adventurers." 

These  views  undoubtedly  mirrored  the  manners,  morals 
and  spirit  of  the  time  of  Adam  Smith,  but  they  are  not  ap- 
plicable to  the  conditions  existing  today,  nor  do  they  betray 


*STnith,  Wealth  of  Nations,  Book  V,  Chap.  I. 

tibid. 

J  Ibid. 

gibid. 


3S8         PROTFXTION   AND   PROGRESS 

that  large  acquaintance  with  the  inckistrial  history  of  the 
ancients  with  which  the  admirers  of  the  Doctor  credit  him. 
The  researches  of  the  modern  critical  school  have  established 
the  fact  with  sufficient  clearness  to  enable  us  to  assert  that 
joint  stock  enterprises  were  familiar  to  the  people  of  ancient 
Rome,  and  that  some  of  the  greatest  achievements  of  antiqui- 
ty were  due  to  them.  Mommsen  is  our  authority  for  the  state- 
ment that  "indications  are  found  of  the  occurrence  among 
the  Romans  of  that  feature  so  characteristic  of  the  system  of 
association — a  coalition  of  rival  companies  in  order  to  jointly 
establish  monopoly  prices."*  The  same  writer  tells  us  that 
one  of  the  phenomena  of  the  sixth  century  of  Rome  was  that 
"the  transference  of  the  charge  of  the  larger  monetary 
transactions  from  the  individual  capitalists  to  the  mediating 
banker,  who  receives  and  makes  payments  for  his  customers, 
invests  and  borrows  money,  and  conducts  their  money  deal- 
ings at  home  and  abroad — which  is  the  mark  of  the  develop- 
ment of  a  monetary  economy — was  already  completely  car- 
ried out  in  the  time  of  Cato.  The  bankers,  however,  were 
not  only  the  cashiers  of  the  rich  in  Rome,  but  everywhere 
insinuated  themselves  into  minor  branches  of  business  and 
settled  in  ever  increasing  numbers  in  the  provinces  and  de- 
pendent states. "t 

No  other  inference  can  be  drawn  from  the  statements 
from  which  this  deduction  of  Mommsen  is  drawn  than  that 
joint  stock  operations  were  a  common  feature  of  the  period 
to  which  he  refers.  When  we  examine  the  original  authori- 
ties we  find  ample  corroboration  in  the  relation  of  circum- 
stances which  can  only  be  explained  by  assuming  the 
existence  of  such  enterprises.  We  find  a  significant  refer- 
ence to  a  system  of  joint  underwriting  by  Cato,  and  there 
are  numerous  allusions  by  other  writers  which  suggest  that 
the  great  mines  of  Gaul  and  Iberia  were  worked  with  asso- 
ciated capital.     The  curious  and  otherwise  inexplicable  fact 

♦Mommsen,  History  of  Rome,  Book  III,  Chap.  XII. 
flbid. 


INDUSTRIALISM   IN  ASIA  359 

that  such  men  as  Caesar,  Marc  Antony  and  Catiline  became 
indebted  for  fabulously  large  sums  to  money  lenders,  who 
apparently  were  furnished  no  security  for  the  amounts  bor- 
rowed, may  be  explained  by  the  existence  of  a  system  similar 
to  that  which  recently  permitted  the  son  of  a  Chicago  million- 
aire to  involve  himself  to  an  extent  that  his  obligation 
rivaled  the  national  debt  of  some  small  countries.  Unless  it 
can  be  shown  that  human  nature  has  greatly  changed  during 
the  eighteen  centuries  of  our  era  it  is  unreasonable  to  as- 
sume, as  most  historians  have  done,  that  the  usurers  of  the 
closing  days  of  the  Roman  Republic,  and  of  the  period  im- 
mediately anterior,  were  in  the  habit  of  staking  politicians  of 
more  or  less  doubtful  reputation  in  the  hope  of  being  reim- 
bursed by  a  turn  in  the  wheel  of  their  political  fortunes. 

But  whether  this  latter  conjecture  is  sound  or  faulty,  the 
evidence  is  overwhelming  that  during  the  times  refe— -ed  to 
there  were  opportunities  in  plenty  for  the  owner  of  capital 
to  employ  the  same  without  the  exercise  of  personal  super- 
vision. Indeed,  it  was  a  characteristic  of  the  society  of  the 
period  that  the  very  rich  made  open  profession  of  scorn  for 
those  who  derived  their  livelihood  from  commerce,  but  did 
not  disdain  to  share  the  profits  of  the  ventures  planned  and 
carried  out  by  the  despised  trading  class.  We  are  told  that 
the  fortune  of  Crassus,  the  richest  man  in  his  day,  was  ac- 
quired by  speculation  and  that  he  disdained  no  branch  of 
gain ;  that  he  entered  into  partnership  with  his  freemen  in 
the  most  varied  undertakings,  and  acted  as  banker,  both  in 
and  out  of  Rome,  in  person  or  by  his  agents,  and  advanced 
money  to  his  colleagues  in  the  Senate. 

The  picture  which  Mommsen  furnishes  of  this  remark- 
able figure  of  antiquity,  wnth  all  of  its  lights  and  shades, 
would  serve  excellently  to  portray  the  operations  of  several 
of  the  richest  men  in  the  United  States,  and  it  is  impossible 
to  study  it  without  reaching  the  conclusion  that  the  declining 
days  of  republicanism  in  Rome  were  marked  by  economic 


36o         PROTECTION   AND   PROGRESS 

phenomena  very  similar  to  those  through  which  the  people  i)t 
the  nineteenth  century  are  passing. 

A  close  investigator  of  the  relations  of  corporations  to 
political  science,  in  a  recent  discussion  of  this  subject,  ex- 
pressed the  view  that  "it  is  not  only  conceivable  that  private 
corporations  may  become  dangerous  to  sovereignty,  but  it  is 
a  fact  that  something  like  private  corporations  did  much  to 
produce  the  anarchy  of  the  Middle  Ages."*  In  citing  this 
passage  there  is  no  disposition  to  convey  the  impression  that 
the  existence  of  private  corporations  is  a  menace  to  the  sov- 
ereignty of  the  people.  This  may  be  the  case,  but  we  prefer 
here  to  accept  the  view  of  the  writer  quoted  that  "a  private 
business  corporation  is,  from  the  view  of  political  science,  a 
group  of  human  beings  usually  belonging  to  the  best  class  of 
citizens,  associated  for  the  prosecution  of  some  great  enter- 
prise and  endowed  with  certain  privileges  and  obligations." 
By  so  doing  we  shall  be  able  to  clearly  establish  the  fact  that 
modern  enterprises  are  not  suggested  by  the  needs  of  those 
promoting  them,  but  in  most  cases  they  are  the  outcome  of 
the  desire  of  those  who  are  already  possessed  of  more  than 
their  share  of  the  means  of  obtaining  the  comforts  of  the 
world  to  add  still  further  to  their  possessions. 

A  little  reflection  will  convince  any  person  that  under- 
takings engaged  in  for  the  purpose  of  earning  dividends  for 
the  owners  of  capital  cannot  possibly  result  in  the  same  fash- 
ion as  individual  efforts  put  forth  to  satisfy  genuine  wants. 
It  is  inconceivable  that  any  number  of  persons  acting  in  a  co- 
operative capacity  would  deliberately  build  two  roadways, 
side  by  side,  through  fields  in  which  they  had  planted  crops. 
The  folly  of  such  a  course  would  be  too  apparent.  The  least 
gifted  member  of  the  community  would  be  able  to  perceive 
the  waste  involved  in  the  creation  of  two  things  where  one 
would  serve  the  same  purpose.  The  most  obtuse  yokel  would 
be  able  to  grasp  the  fact  that  the  energy  wasted  in  building 

♦Burgess,  Political  Science  Quarterly,  June,  1898.     Article,  "Corpo- 
rations and  Political  Science." 


INDUSTRIALISM   IN  ASIA  361 

the  unnecessary  road  might  have  been  more  profitably  di- 
rected elsewhere,  or  that  it  would  have  been  more  sensible  to 
employ  the  time  consumed  in  useless  toil  in  restful  leisure. 
But  the  promoters  of  joint  stock  enterprises,  having  no  other 
object  in  view  than  the  earning  of  dividends  and  not  acting 
in  response  to  real  wants,  are  uninfluenced  by  considerations 
of  this  kind. 

A  corporation  that  earns  dividends  by  driving  a  rival  into 
bankruptcy  is  as  much  a  monument  to  the  sagacity  of  its 
projector  as  though  it  had  accomplished  what  Mr.  Mills  as- 
sumes all  efforts  to  create  wealth  accomplish.  If  all  the  ef- 
forts of  individuals  and  corporations  were  well  directed — 
that  is  to  say,  responsive  to  wants  already  existent,  or  de- 
signed to  meet  those  likely  to  arise — there  would  be  some 
justification  for  that  species  of  optimism  which  finds  expres- 
sion in  the  confident  opinion  that  the  result  of  the  entrance 
of  Oriental  peoples  into  the  modern  industrial  arena  is  sure 
to  be  beneficial.  But  while  the  largest  share  of  the  enterprise 
of  to-day  is  promoted  by  a  system  whose  driving  wheel  is 
speculation,  and  the  most  marked  result  is  overproduction, 
it  is  idle  to  contend  that  the  threatened  competition  is  not  a 
menace  to  the  existing  order  of  society.  Had  there  been  any 
foundation  for  Adam  Smith's  assumption  that  joint  stock 
enterprises  for  the  conduct  of  manufacturing  industries  could 
not  succeed,  the  progress  of  Oriental  rivalry  would  neces- 
sarily have  been  slow.  If  it  were  necessary  for  the  Japan- 
ese to  depend  upon  their  own  uncombined  efforts  to  create  a 
cotton  industry  it  is  more  than  probable  that  its  expansion 
would  not  proceed  more  rapidly  than  the  demand  for  home 
consumption  justified.  There  is  no  doubt  that  Smith  was 
right  in  assuming  that  men  acting  on  their  own  behalf  are 
naturally  more  cautious  than  those  who  are  engaged  to  per- 
form a  service  for  others,  but  he  entirely  mistook  the  nature 
of  the  conflict.  Like  the  writer  in  the  Overland  Monthly, 
he  supposed  that  the  efforts  of  men  engaging  in  industrial 
enterprises  would  be  directed  to  the  satisfaction  of  well 


362         PROTECTION  AND   PROGRESS 

ascertained  wants,  or  to  meeting  those  which  might  be  cre- 
ated. He  failed  to  see  that  a  plethora  of  capital  would  bring 
about  a  condition  of  affairs  in  the  industrial  world  in  which 
the  energies  of  the  enterprising  would  be  devoted  to  the  ex- 
tirpation of  rivals,  and  that  in  the  effort  to  accomplish  this 
object  the  primary  purpose  of  producing — to  satisfy  wants 
— would  be  wholly  lost  sight  of. 

For  carrying  on  such  a  conflict  a  combination  of  capital- 
ists, like  the  entity  called  a  State,  can  always  secure  willing 
and  able  servants.  Just  as  the  government  of  a  wealthy  and 
powerful  nation  obtains  the  services  of  its  most  gifted  citi- 
zens by  offers  of  rewards,  so  does  the  corporation  of  modern 
times.  No  one  will  challenge  the  assertion  that  there  are 
now  in  the  employ  of  the  stock  companies  of  the  great  indus- 
trial nations  men  as  able,  honest  and  loyal  as  those  in  the 
service  of  the  governments ;  nor  will  anyone  deny  that  these 
hired  servants  of  capital  work  as  zealously  and  intelligently 
to  further  the  interests  of  the  corporations  with  which  they 
are  identified  as  they  would  if  they  were  carrying  on  their 
ovv^n  concerns.  To  maintain  a  contrary  assumption  it  would 
be  necessary  to  ignore  the  generally  conceded  fact  that  cor- 
porations are  constantly  absorbing  the  best  organizers  and 
the  most  capable  men  of  every  community.  The  rewards 
offered  to  servants  by  corporations  are  higher  than  most  per- 
sons can  hope  to  achieve  through  their  own  exertions ;  conse- 
quently volunteers  of  ability  eagerly  offer  their  services, 
which  are  accepted  and  employed  by  capital  to  carry  out  the 
programme  of  crushing  individual  effort,  a  course  rendered 
imperatively  necessary  to  satisfy  the  desire  of  those  who 
already  have  more  than  they  need  to  add  to  their  accumula- 
tions. 

No  sophistry  can  disguise  these  facts.  It  may  be  freely 
admitted  that  the  effect  of  combination  of  capital  is  to  reduce 
the  cost  of  production,  and  thus  make  it  possible  for  the  con- 
sumers who  have  the  money  wherewith  to  buy  to  obtain  their 
supplies  more  cheaply,  and  still  the  charge  that  the  inter- 


INPUSTRIALISM   IN  ASIA  363 

position  of  the  joint  stock  company  renders  it  possible  for 
organized  capital  to  shift  fields  of  industry  and  utterly  de- 
stroy whole  communities  and  even  nations  remains  uncon- 
futed. 

The  phenomenon  of  foreign  capital  seeking  the  United 
States  as  a  field  of  investment  is  a  familiar  one.  It  has  here- 
tofore been  regarded  mainly  from  the  standpoint  of  the 
theorist  who  sees  nothing  but  universal  benefit  in  the  devel- 
opment of  fresh  resources,  but  the  signs  are  multiplying  that 
the  English  people  are  coming  to  look  upon  the  conscious 
and  unconscious  efforts  of  British  capitalists  to  promote 
rival  industries  on  this  side  of  the  water  as  a  mistake.  They 
certainly  cannot  view  with  equanimity  the  creation  of  enor- 
mous iron  and  steel  plants  in  the  United  States,  whose  very 
magnitude  make  the  competition  of  the  works  of  smaller 
countries  impossible.  The  reduction  in  the  price  of  iron  and 
steel  due  to  the  superior  facilities  of  the  large  American 
establishments  will  hardly  compensate  the  British  for  the 
inevitable  crowding  out  of  the  products  of  their  own  works, 
with  all  the  evils  that  such  a  result  may — nay,  must — bring 
in  its  train. 

The  historian  or  economist  who  surveys  the  effects  of 
this  movement  of  capital,  say  a  'thousand  years  hence,  may 
conclude  that  all  was  for  the  best  and  that  it  was  but  natural 
that  the  transference  of  the  seat  of  industry,  which  seemed 
to  have  been  firmly  established  in  Western  Europe  in  the 
nineteenth  century,  should  have  taken  place,  and  that  less 
exploited  regions  should  have  had  their  turn  at  the  founts 
of  prosperity,  but  he  will  not  wonder  that  every  device  which 
ingenuity  could  suggest  was  resorted  to  in  order  to  avert  the 
commercial  decay  which  such  a  transference  necessarily  in- 
volved. Perhaps  acquired  experience  will  have  taught  the 
economist  of  the  future  that  the  benefits  of  an  easy  inter- 
change of  commodities  were  more  fanciful  than  real,  and 
that  it  resulted  much  oftener  in  repression  of  productivity 
than  in  its  promotion. 


364         PROTECTION   AND   PROGRESS 

That  such  a  conchision  would  be  inevitable  if  the  Oriental 
nations  of  the  world  should  become  active  rivals  of  Western 
peoples  in  manufacturing,  without  acquiring  the  habits  of 
Westerns,  seems  indisputable.  It  is  contended,  however, 
that  the  first  named  phenomenon  could  not  occur  without 
being  closely  followed  by  the  other.  If  this  assumption 
could  be  established  there  would  be  no  cause  for  apprehen- 
sion, but  before  it  can  be  accepted  as  sound  numerous  ex- 
periences, all  tending  to  show  that  the  ingrained  habits  of 
centuries  cannot  be  changed  in  the  twinkling  of  an  eye,  must 
be  explained  away.  The  fact  that  the  Chinese  who  have 
found  their  way  to  this  country  have  for  a  long  period 
been  in  the  enjoyment  of  rates  of  compensation  which  would 
have  enabled  them  to  materially  raise  their  standard  of  com- 
fort, but  that  they  have  refused  to  do  so,  is  significant  and 
warrants  the  assumption  that  the  same  result  would  occur  in 
the  country  from  which  they  come  if  Western  industries 
were  introduced. 

The  evidence  that  the  Orientals  referred  to  are  not  in- 
duced by  example  or  opportunity  to  become  thriftless  is  over- 
whelming. The  practice  of  herding  together  in  large  num- 
bers in  close  quarters  continues  in  California,  although  the 
race  has  enjoyed  half  a  century  of  comparative  prosperity  in 
the  State.  There  is  no  disposition  whatever  exhibited  by 
these  Orientals  to  imitate  the  individualism  of  Western  peo- 
ples which  leads  even  the  illy  compensated  laborer  to  exhibit 
personal  taste  in  the  selection  of  his  dress.  Even  in  the  mat- 
ter of  alimentation  it  has  been  observed  that  Chinese  domes- 
tics in  the  service  of  Americans  of  luxurious  habits,  as  a 
rule,  prefer  to  adhere  to  a  simple  diet  of  rice  and  common 
vegetables  rather  than  indulge  in  the  variety  which  the  em- 
ployer's table  affords  and  of  which  they  are  free  to  partake. 
As  for  the  Chinese  workers  in  store  and  clothing  factories, 
it  is  doubtful  whether  they  ever  think  of  such  a  thing  as  a 
more  varied  ration  than  they  were  accustomed  to  at  home. 


INDUSTRIALISM   IN   ASIA  365 

although  their  desires  may  extend  so  far  as  to  impel  them  to 
increase  their  indulgence  in  rice  and  pork. 

No  matter  how  impressively  Samuel  Smiles  may  dis- 
course on  the  beauties  of  abstemiousness  and  the  virtues  of 
thrift,  it  must  be  admitted  that  when  they  are  carried  to  ex- 
tremes they  result  disastrously  to  that  expansion  which  is 
considered  by  economists  to  be  essential  to  progress.  We 
may  study  the  case  of  an  individual  who  by  the  practice  of 
self-denial  during  thirty  or  forty  years  has  laid  aside  a  suffi- 
cient sum  to  maintain  himself  in  comparative  comfort  during 
the  closing  days  of  his  life,  and  freely  admit  that  it  has  been 
a  good  thing  for  the  person  under  consideration.  But  it  is 
quite  different  when  we  come  to  inquire  into  the  effects  of 
abstemiousness  upon  society  and  ask  ourselves  what  would 
be  the  result  if  Western  men  were  as  a  rule  thrifty  instead  of 
being  the  reverse.  If  they  were,  a  condition  of  affairs  anal- 
ogous to  that  witnessed  in  China  today,  and,  on  a  smaller 
scale,  in  the  colony  of  30,000  Chinese  making  their 
home  in  San  Francisco,  would  inevitably  exist.  If  all  Euro- 
peans compelled  to  toil  for  a  living  should  decide  to  avoid  the 
use  of  unnecessary  food  and  drink,  and  carefully  refrain  from 
the  purchase  of  articles  of  clothing  or  utensils  and  furniture 
for  household  use  not  absolutely  required,  and  consent  to  live 
in  cramped  quarters  until  they  had  saved  enough  money  to 
indulge  their  fancies,  it  is  more  than  probable  that  the  very 
aim  of  thrift  would  be  defeated  by  impairing  the  opportunity 
to  earn  a  competency.  Writers,  such  as  Smiles,  quite  over- 
look the  fact  that  opportunities  of  obtaining  employment, 
rate  of  wages  and  consumptive  ability  bear  a  close  relation 
to  each  other,  and  that  to  greatly  curtail  consumption  by  the 
practice  of  thrift  would  certainly  react  on  the  wage  earner. 

The  exercise  of  thrift  by  the  individual  undeniably  gives 
him  an  advantage  over  the  thriftless,  but  it  is  an  advantage 
which  could  not  be  achieved  if  the  world  was  made  up  of 
people  accustomed  to  the  practice  of  rigorous  economy.  In- 
telligently regarded,  the  self-denial  practiced  for  the  purpose 


366         PROTECTION   AND   PROGRESS 

of  accumulating  capital  is  at  once  seen  to  be  intensely  selfish, 
for  its  ultimate  purpose  is  to  profit  by  the  indiscretions  of 
those  who  are  too  foolish  or  weak  to  undergo  temporary  dis- 
comfort for  the  sake  of  future  advantage.  And  while  there 
is  undoubtedly  an  essential  difference  between  the  thrift 
practiced  by  a  Western — which  almost  invariably  is  con- 
sciously or  unconsciously  directed  by  the  desire  to  accumu- 
late capital  for  future  use — and  that  which  centuries  of  habit 
have  forced  upon  the  people  of  Oriental  nations,  the  result  in 
both  cases,  if  the  propensity  is  carried  to  extremes,  must  be 
nearly  the  same. 

If  it  is  true,  as  nearly  all  economists  are  ready  to  concede, 
that  labor  is  the  chief  factor  in  production,  then  it  must  be 
obvious  that  the  country  which  has  the  most  abundant  sup- 
ply of  the  cheapest  labor,  all  things  else  being  equal,  will  suc- 
ceed in  a  struggle  in  which  competition  is  absolutely  unre- 
strained. But  the  persons  who  antagonize  the  idea  that  the 
Orientals  may  become  formidable  competitors  of  Western 
peoples  declare  that  the  differences  which  now  exist  between 
Orientals  and  Westerns,  and  which  give  the  latter  an  advan- 
tage over  the  former,  cannot  be  removed,  and  that  they  will 
always  suffice  to  counterbalance  the  cheapness  of  labor  even 
should  the  conditions  fail  to  materialize  which  another  set  of 
theorists  say  must  inevitably  arise  in  the  event  of  the  general 
introduction  of  modern  industrial  methods  into  the  Orient. 

Those  who  tenaciously  cling  to  the  belief  that  there  can 
be  no  formidable  competition  between  peoples  of  varying 
grades  of  intelligence  and  accomplishment  do  so  in  defiance 
of  a  mass  of  testimony  which  seems  to  conclusively  establish 
that  it  may  be  possible  for  an  imitating  nation  under  a  system 
of  unrestrained  commercial  rivalry  to  seize  the  fruits  which 
the  originator  should  have  gathered.  In  a  monograph  on 
the  subject  of  Japanese  competition  a  writer  has  grouped 
together  a  great  quantity  of  evidence  on  this  point.*     He 

*Young,  Competition  of  Oriental  Manufacturers  and  the  Industrial 


INDUSTRIALISM   IN  ASIA  367 

showed  that  in  many  lines  of  industry,  notably  in  the  spin- 
ning and  weaving  of  cotton  with  improved  machinery,  this 
people  had  made  remarkable  advances,  and  that  the  proba- 
bility was  largely  in  favor  of  their  continuing  to  do  so.  The 
arguments  advanced  were  assailed  in  many  quarters,  and  the 
issues  involved  were  somewhat  obscured  by  the  introduction 
of  the  question  of  currencies,  but,  on  the  whole,  it  may  be 
confidently  urged  that  there  was  a  tacit  admission  on  the  part 
of  the  disputants  that  there  is  no  obstacle  to  the  building  up 
of  a  great  manufacturing  industry  in  Japan. 

Denial  of  such  a  possibility  would  be  useless  in  the  face  of 
the  multiplying  proofs  of  the  fact.  There  is  therefore  no 
longer  any  attempt  made  to  do  so,  but  instead  the  efforts  of 
theorists  are  directed  to  demonstrating  that  the  advent  of  the 
new  rivals  will  prove  beneficial  rather  than  detrimental  to 
Western  manufacturers.  To  support  this  curious  contention 
they  cite  the  increased  exportations  of  Western  countries  to 
Japan  and  endeavor  to  convey  the  impression  that  the  threat- 
ened mighty  dislocation  of  the  world's  industries  is  a  figment 
of  the  imagination,  and  that  the  movement  now  in  progress 
is  merely  a  readjustment  of  the  manufacturing  energies  of 
the  world  in  which  the  Western  peoples  will  be  sure  to  come 
out  ahead.  These  optimists  carefully  close  their  eyes  to  the 
fact  that  the  increased  takings  of  goods  from  foreigners  by 
the  Japanese  are  ominous  of  intense  future  rivalry.  They 
willfully  ignore  the  continuously  increasing  demand  for  ma- 
chinery, or  rather  they  refuse  to  recognize  the  fact  that  its 
use  in  Japan  is  displacing  English,  German  and  American 
labor. 

It  may  be  gratifying  to  those  particularly  concerned  in 
the  production  of  cotton  spinning  and  weaving  machines  to 
note  in  the  exports  of  articles  of  British  manufacture  that 
there  is  a  large  increase  in  this  line,  but  the  movement  will 
scarcely  be  regarded  with  equanimity  in  Lancashire,  where 

Progress  of  the  Orient,  U.  S.  Senate  Docket,  No.  311,  Fifty-fourth 
Congress,   First   Session. 


368         PROTECTION   AND   PROGRESS 

the  population  has  long  since  outgrown  its  opportunity  for 
employment  and  capital  has  ceased  to  hope  for  steady  re- 
muneration. The  increasing  exports  of  raw  cotton  to  Japan 
from  this  country  may  be  considered  in  some  quarters  as  an 
unmixed  benefit,  but  the  manufacturers  and  operatives  of 
the  New  England  cotton  mills  can  hardly  be  persuaded  to 
accept  this  view  of  the  case  while  eagerly  seeking  an  outlet 
for  their  surplus  products,  the  failure  to  find  which  they 
know  will  be  attended  with  enforced  cessation  of  operations 
and  reductions  of  wages. 

The  tendency  of  professional  economists  to  underrate  the 
teachings  of  experience  is  unfortunate.  If  it  were  not  for 
this  habit  the  fact  would  be  constantly  kept  in  mind  that  the 
views  respecting  the  inabilit}'^  of  the  Japanese  and  other 
Orientals  to  successfully  establish  manufacturing  industries 
capable  of  rivaling  those  of  the  Western  world  are  merely  a 
repetition  of  those  advanced  a  half  a  century  ago  by  all 
classes  of  Britons  when  considering  the  subject  of  A.merican 
competition.  Our  estimate  of  the  capabilities  of  the  Japanese 
and  Chinese  of  to-day  may  be  as  far  removed  from  accuracy 
as  was  that  of  the  British  who  once  freely  opined  that  Amer- 
icans had  not  the  skill  and  could  not  accumulate  the  capital 
necessary  to  engage  in  successful  rivalry  with  nations  having 
a  record  of  industrial  capacity  extending  back  for  centuries. 

It  would  be  repetition  to  introduce  in  this  place  the  proofs 
which  signally  confute  the  erroneous  view  referred  to,  but 
they  may  be  condensed  into  the  assertion  that  at  the  begin- 
ning of  the  present  century  and  during  the  greater  part  of 
the  first  sixty  years  since  its  opening,  American  skill  and 
mechanical  capacity  were  rated  far  lower  than  the  people  of 
the  Occident  are  now  inclined  to  estimate  Japanese  ability 
and  ingenuity.  It  would  be  difficult  to  find  in  English  pub- 
lications of  the  middle  of  the  century  tributes  to  American 
skill  and  taste  as  emphatic  as  those  quite  recently  paid  by 
Rein,  Edwin  Arnold,  Henry  Norman,  Leonowens  and  others, 
who,  after  a  careful  study  of  the  characteristics  and  capacity 


INDUSTRIALISM   IN  ASIA  369 

of  the  Japanese,  have  united  in  the  expression  of  the  con- 
viction that  in  adaptability  they  excelled  most  peoples  and 
that  skill  and  taste  are  the  common  possession  of  all  classes 
in  Japan. 

A  people  with  such  qualifications  who  have  the  wit  to 
pursue  the  course  described  by  a  Japanese  scholar  connected 
with  an  American  educational  institution  are  not  to  be  de- 
spised as  competitors.  "From  the  time  of  the  bombard- 
ment," says  this  witness,  "Satsuma  and  Choshiu  began  to 
introduce  European  machinery  and  inventions,  to  employ 
skilled  Europeans  to  teach  them  and  to  send  their  young  men 
to  Europe  and  America  to  acquire  industrial  and  other  in- 
formation."* The  inevitable  results  of  such  a  policy  are  de- 
scribed at  length  in  the  Congressional  document  above  re- 
ferred to  and  are  being  supplemented  almost  daily  with  in- 
formation all  tending  to  show  that  Japanese  and  other 
Oriental  competition  is  a  factor  that  must  be  reckoned  with, 
and  that  it  would  be  a  fatal  error  to  assume  that  it  will  re- 
quire centuries  of  training  in  modern  methods  to  bring  these 
people,  whose  development  has  been  arrested  for  ages,  to  a 
stage  that  will  make  them  industrially  formidable. 

There  is  an  opinion  entertained  in  some  quarters  that  the 
Japanese  are  incapable  of  developing  the  inventive  faculty, 
and  that  this  drawback  will  prove  fatal  to  any  hopes  they 
may  entertain  of  surpassing  Western  peoples  who  have 
shown  that  they  have  the  gift  of  origination  in  a  remarkable 
degree,  but  this  assumption  is  probably  without  foundation. 
There  is  evidence  that  in  due  course  of  time,  when  the  proper 
stimulus  is  applied,  inventiveness  will  display  itself  in  Japan 
and  other  parts  of  the  Orient.  It  would  be  singular  if  China, 
which  claims,  or  has,  the  credit  of  originating  paper,  ex- 
plosives and  a  score  of  other  great  utilities,  should  have  en- 
tirely lost  the  power  of  invention.    The  probabilities  are  that 


♦lyenaga,    Constitutional    Development    of    Japan,    Johns    Hopkins 
University  Political  Science  Series. 
24 


370         PROTECTION  AND  PROGRESS 

it  is  only  dormant  and  that  some  day  the  Orientals  will  be 
fully  abreast  of  other  peoples  in  this  regard. 

But  whether  this  proves  to  be  the  case  or  not  is  imma- 
terial to  the  present  contention.  Indeed,  it  is  possible  that 
a  high  development  of  the  imitative  faculty  may  prove  more 
injurious  to  Western  peoples  than  marked  progress  in  the 
direction  of  originality.  We  have  only  to  consider  that  the 
chief  wants  of  the  human  race  are  supplied  with  staple  prod- 
ucts the  character  of  which  changes  very  little  in  the  course 
of  ages  to  realize  how  small  a  part  originality  plays.  The 
people  of  the  Orient  have  been  using  textile  fabrics  made  by 
hand  for  centuries,  and  these  products  of  the  peasant's  loom 
have  been  but  slowly  displaced  by  the  manufactured  goods  of 
the  Occident.  The  caprices  of  fashion  are  practically  un- 
known in  the  East  and  the  desire  for  change  is  non-existent. 
This  was  quickly  perceived  by  those  engaged  in  catering  for 
Oriental  trade,  and  for  a  long  period  the  aim  of  the  British 
has  been  to  supply  the  markets  of  China  and  other  parts  of 
Asia  with  articles  that  the  people  are  familiar  with.  The 
impulse  to  improve  either  in  design  or  quality  has  been  ab- 
sent because  necessity  has  not  acted  as  a  stimulus.  If 
economists  will  take  the  trouble  to  peruse  the  Consular  re- 
ports of  the  British,  or  those  of  our  own  country,  they  will 
gain  some  valuable  information  on  this  point.  It  will  be  seen 
from  these  documents  that  great  emphasis  is  placed  upon 
the  necessity  of  consulting  the  prejudices — we  can  hardly 
call  them  tastes — of  the  people  of  lands  where  there  is  no  de- 
veloped manufacturing  industry.  There  are  instances  with- 
out number  in  these  official  suggestions  of  severe  depreca- 
tion of  the  mistaken  idea  that  an  article  superior  in  quality 
or  appearance  can  displace  one  to  which  a  semi-civilized  or 
backward  people  has  become  habituated.  The  Germans  and 
English  have  long  been  accustomed  to  acting  on  the  knowl- 
edge of  this  characteristic,  and  shrewd  manufacturers  re- 
frain from  attempting  innovations. 

In  this  peculiarity  lurks  a  grave  menace.     The  extraor- 


INDUSTRIALISM   IN   ASIA  371 

dinary  tenacity  with  which  the  Oriental  clings  to  the  habits 
once  formed  may  prove  an  offset  to  all  the  advantages  which 
inventiveness  should  confer  on  its  possessors.  It  is  possible 
that  the  introduction  of  machinery  into  the  Orient  may  result 
in  absolute  retrogression  in  many'industries,  or,  at  least,  in  an 
arrest  of  the  tendency  to  create  labor-saving  appliances.  The 
suggestion  seems  revolutionary,  but  it  needs  only  to  be 
studied  closely  to  discover  that  cheap  labor  in  overwhelming 
abundance  may  serve  the  purpose  of  mankind  as  effectively 
as  automatic  machinery  which  dispenses  with  the  use  of 
human  labor  and  leaves  the  displaced  laborers  to  shift  for 
themselves. 

If  the  textile  machinery  of  the  West  is  introduced  in  its 
present  state  of  perfection  into  China,  and  the  natives  of 
that  country  are  taught  to  manipulate  it  successfully,  it  would 
require  improvements  of  almost  inconceivable  importance  in 
the  direction  of  labor  saving  to  permit  the  people  of  such 
countries  as  the  United  States  and  England  to  compete  for 
the  Oriental  trade  or  to  withstand  Oriental  competition  at 
home. 

That  the  Chinese  will  experience  no  difficulty  in  learning 
to  manipulate  spinning  and  weaving  machinery  no  one  ac- 
quainted with  the  progress  made  by  the  Japanese  in  the  cotton 
textile  industry  will  doubt  for  a  moment.  In  1897,  in  spite 
of  a  severe  depression  due  to  currency  troubles,*  Japan  in- 
creased its  imports  of  raw  cotton  by  31,941  tons.  In  the  year 
named  the  consumption  of  the  raw  product  by  Japan  was 
nearly  150,000  tons,  and  it  is  highly  significant  that  some  of 
its  takings  were  from  countries  which  were  suffering  from 
overproduction  of  cotton  textiles.  Of  the  quantity  mentioned 
British  India  supplied  180,053,500  pounds,  China  65,482 
pounds,  the  United  States  46,365,097  pounds,  f    While  the 


*Lay,    Report  of   Assistant   Japanese   Secretary   to    Her   Majesty's 
Legation  at  Tokio. 

fGiflFen,  Letter  to  London  Times,   May   18,   1898. 


372        PROTECTION   AND   PROGRESS 

Japanese  were  drawing  on  us  for  raw  cotton  our  mills  were 
shutting  down  to  afford  an  opportunity  to  work  off  surplus 
slocks  of  cotton  textiles,  and  incidentally  to  bring  American 
operatives  to  a  realization  of  the  fact  that  this  country,  in 
order  to  hold  its  own,  will  be  compelled  to  conform  to  the 
labor  conditions  of  other  parts  of  the  world. 

What  has  been  accomplished  in  Japan  will  be  more  than 
matched  by  the  future  achievements  of  her  near  neighbor, 
China.  No  matter  what  may  be  the  present  condition  of 
the  people  of  that  country,  it  will  speedily  be  transformed 
when  Western  methods  are  once  introduced.  There  are 
many  who  are  disposed  to  take  the  fatally  erroneous  view 
that  there  can  be  no  awakening  in  a  nation  which  has  been 
steeped  for  centuries  in  ignorance,  and  in  which  conserva- 
tism has  been  pushed  to  such  extremes  as  to  be  indistin- 
guishable from  lethargy.  But  those  who  know  anything  of 
the  industrial  history  of  the  foremost  nations  of  Europe  are 
aware  that  their  peoples  passed  through  an  experience  not 
essentially  different  from  that  which  is  regarded  as  a  fatal 
barrier  to  future  progress  in  China.  We  are  told  by  the 
closest  student  of  English  industry  in  the  Middle  Ages  that 
"there  is  no  part  of  the  Western  World  in  which  so  little 
change  was  induced  on  the  fortunes,  on  the  life,  and  on  the 
habits  of  the  people  as  in  rural  England  from  the  peaceful 
reign  of  Henry  III  to  the  earlier  years  of  George  III,"*  and 
the  same  writer  reminds  us  that  for  centuries  the  use  of 
iron  in  agriculture  was  so  restricted  in  England  that  wooden 
pegs  were  used  for  harrow  teeth  and  that  the  plow  was 
merely  a  wooden  frame  with  an  iron  point,  f  When  we 
call  to  mind  that  the  use  of  iron  and  steel  must  have  been 
common  in  the  days  of  the  Roman  occupation  of  Britain, 
and  that  in  many  provinces  of  the  great  empire  of  antiquity 
agricultural  machinery  resembling  or  at  least  foreshadow- 
ing the  great  labor-saving  appliances  of  modern  times  was 
used,  the  recurrence  to  primitive  methods  seems  marvelous. 


♦R'l^pers.  Six  Centuries  of  Work  and  Wages,  p.  86. 
flbid,  p.  88. 


INDUSTRIALISM   IN  ASIA  373 

The  British  and  other  peoples  subject  to  Rome  must  have 
been  acquainted  with  these  aids  to  agricuhure.  We  are 
therefore  compelled  to  conclude  that  their  abandonment  indi- 
cates a  condition  of  affairs  in  all  parts  of  Europe,  for  a 
long  period  after  the  collapse  of  Rome,  which  presents  a 
close  analogy  to  that  now  witnessed  in  China. 

Who  will  be  so  bold  as  to  predict  that  the  experience  of 
Europe  will  not  be  repeated  in  China,  and  who  so  short 
sighted  as  to  be  unable  to  see  that  there  are  forces  now  at 
work  which'  will  cause  the  awakening  to  be  abrupt  and 
not  a  drowsy  and  slow  return  to  industrial  consciousness  and 
activity?  When  Europe  lost  the  arts  and  sciences  and  was 
plunged  in  the  darkness  of  the  Middle  Ages  a  religious  im- 
pulse moved  her  people  to  invade  countries  equally  steeped 
in  lethargy,  but  in  which  the  survivals  of  great  industrial 
accomplishments  were  more  numerous.  When  the  Crusad- 
ers returned  to  their  homes  they  brought  with  them  sugges- 
tions and  ideas  as  fresh  and  marvelous  in  their  way  as  those 
which  Columbus  and  his  fellow  explorers  returned  with 
from  the  newly  discovered  Western  Hemisphere.  It  was 
from  these  ideas  brought  from  Saracen  countries  that 
much  of  the  cunning  and  skill  of  modern  Europe  was  subse- 
quently evolved.  It  was  a  slow  and  painful  process,  and 
many  centuries  were  occupied  in  bringing  the  flower  of 
Western  industry  to  its  present  perfection. 

But  there  is  no  likelihood  that  there  will  be  a  repetition 
in  the  Orient  of  laborious  efforts  to  recover  lost  knovyledge 
and  to  gain  that  which  is  new.  We  need  but  watch  the 
career  of  Japan  during  the  past  forty  years  to  have  borne 
in  our  minds  the  fact  that  there  are  forces  at  work  which 
were  undreamed  of  during  the  centuries  preceding  this, 
and  which  make  the  dissemination  of  the  wisdom  and  skill  of 
ages  a  matter  of  generations  and  not  of  cycles. 

In  another  place  the  mobile  feature  of  capital  has  been 
dwelt  upon  at  length ;  it  is,  therefore,  unnecessary  to  repeat 
the  evidence  which  conclusively  proves  that  under  the  mod- 


374         PROTECTION  AND  PROGRESS 

em  competitive  system  it  can  be  obtained  in  sufficient  quan- 
tities to  call  forth  all  the  dormant  energies  and  abilities  of 
Oriental  peoples.  That  those  who  own  the  capital  which 
may  be  employed  for  this  purpose  will  not  shrink  from  the 
consequences  which  the  extension  of  aid  to  the  Orientals 
may  entail  it  is  hardly  necessary  to  state.  Those  who  invest 
their  money  in  the  bonds  or  shares  of  joint  stock  enterprises 
seldom  if  ever  concern  themselves  further  than  to  ascertain 
whether  their  investment  is  likely  to  prove  safe  and  whether 
there  is  a  reasonable  ground  for  expecting  an  adequate  re- 
turn in  the  shape  of  dividends  or  interest.  There  is  not  one 
shareholder  in  a  million  who  would  be  deterred  by  senti- 
mental considerations  from  receiving  profits  earned  by  a 
company  that  had  driven  another  into  bankrutpcy ;  that  is 
part  of  the  game. 

This  being  the  case,  we  may  assume  that  the  tendency  to 
invest  in  Oriental  enterprises,  which  began  to  manifest  itself 
some  years  ago,  will  increase,  and  as  the  opportunities  to  em- 
ploy capital  in  the  Far  East  are  extended  more  and  more  of 
it  will  be  attracted  to  that  quarter  of  the  globe.  In  the  be- 
ginning the  nations  with  established  industries  will  exper- 
ience no  evil  results  from  these  investments.  Their  hurtful 
character  will  be  disguised  by  figures  showing  expanding  ex- 
ports. For  some  time  to  come  the  persons  dissenting  from 
the  proposition  that  Oriental  competition  has  menacing  ele- 
ments will  continue  to  expatiate  on  enlarged  exports  of  ma- 
chinery and  such  raw  products  as  cotton,  but  when  the  day 
arrives  in  which  the  Chinese  and  Japanese  shall  have  mas- 
tered the  use  of  modern  contrivances  and  are  able  to  not  only 
supply  their  own  needs  but  will  create  a  surplus  which  their 
cheaper  labor  will  enable  them  to  sell  at  prices  which  the 
Western  cannot  compete  with,  a  revulsion  of  feeling  will  take 
place,  and  the  fase  economic  theory  that  the  interest  of  the 
consumer  is  of  paramount  importance  will  be  abandoned,  and 
in  its  place  will  be  substituted  the  more  rational  economic 
idea  that  the  producer  is  of  more  consequence  than  he  "who 
toils  not  nor  spins." 


CHAPTER  XVII. 
FORMATION  OF  TRUSTS. 

WHY  THEY  EXIST  AND  HOW  THEY   MAY  BE  RESTRAINED. 

Causes  that  lead  to  the  formation  of  trusts  or  combinations — The 
vice  of  commercial  wrecking  directly  promoted  by  competition — 
Mr.  Mallock's  "great  man"  theory  and  its  defects — Labor  today 
responds  to  the  spur  of  necessity  just  as  the  builders  of  the  pyr- 
amids did  to  the  slave  driver's  lash — The  great  men  who  pro- 
vide work  are  not  always  public  benefactors — A  system  which 
compels  the  consumer  to  pay  for  unnecessary  facilities — The 
captains  of  modern  industry  harder  taskmasters  than  the  Pha- 
raohs— The  supply  of  brains  at  the  command  of  capital  becoming 
larger  and  the  compensation  smaller — Rogers'  prediction  that 
disregards  of  the  rights  of  labor  may  result  in  revolution — Au- 
tomatic increase  of  the  value  of  capital — The  growth  of  protec- 
tion due  to  recognition  of  the  dangers  of  unrestrained  competi- 
tion— Competition  under  restraint  and  capital  under  regulation 
may  avert  the  danger  of  socialism — The  delusive  benefits  con- 
ferred by  trusts — Trusts  not  confined  to  protectionist  countries 
— Growth  of  international  trusts — The  remedy  for  trusts  must  be 
a  national  one. 

In  the  concluding  paragraph  of  the  discussion  of  the 
probabihty  of  the  Orientals  engaging  in  a  manufacturing 
competition  with  Western  nations  the  opinion  was  expressed 
that  in  the  near  future  the  world  would  be  compelled  to 
recognize  the  necessity  of  considering  .he  claims  of  the 
producer  as  superior  to  those  of  the  mere  consumer.  This 
view  is  based  on  the  belief  that  it  will  soon  be  perceived 
that  the  relegation  of  the  producer  to  a  secondary  place  has 
brought  disaster  to  mankind.  In  all  countries  and  in  all 
ages  where  the  consumer  has  been  esteemed  of  more  conse- 


376         PROTECTION   AND   PROGRESS 

quence  than  the  producer  a  condition  akin  to  slavery  has 
existed.  The  principle  that  the  needs  of  the  consumer 
are  of  paramount  importance  is  the  corner  stone  of  slav- 
ery, and  the  Cobdenites  boldly  appropriated  it  and  worked 
it  into  the  economic  edifice  they  sought  to  erect. 

This  is  not  an  extravagant  or  far  fetched  comparison. 
The  most  limited  intellect  can  grasp  the  fact  that  the  insti- 
tution of  slavery,  whenever  and  wherever  it  has  existed,  has 
always  been  maintained  for  the  purpose  of  permitting  one 
class  of  the  community  to  live  in  comfort  and  idleness  at  the 
expense  of  the  other.  The  ancient  Romans,  who,  in  the 
management  of  their  slaves,  had  developed  a  degree  of  fero- 
city which  tinged  their  laws  and  communicated  its  brutal- 
izing influence  to  every  class  of  society ;  the  gentle  Sir 
Thomas  More,  who,  in  his  "Utopia."  pictured  a  future  in 
which  the  path  of  life  would  be  strewed  with  roses,  and  the 
modern  free  trader  are  at  one  on  this  point.  They  are  all 
perfectly  agreed  that  the  consumer  is  the  first  to  be  consid- 
ered. 

There  is  no  essential  difference  between  a  society  in 
which  necessity  compels  some  men  to  do  all  the  menial  work 
and  that  in  which  a  man  is  made  a  chattel  by  the  fortunes  of 
war  or  process  of  law.  In  "Utopia"  all  the  uneasy  and  sor- 
did services  about  the  halls  were  performed  by  the  slaves  of 
the  Utopians* ;  in  a  modern  industrial  nation  similar  services 
are  performed  by  the  slaves  of  necessity  who  masquerade 
as  freemen.  The  term  slave  is  an  opprobrious  one,  but  some 
of  those  who  wore  it  in  ancient  times  looked  down  upon 
freemen  who  were  the  real  slaves.  In  the  days  of  the  Ro- 
man Empire,  when  the  toiling  masses  were  taxed  to  contrib- 
ute to  the  luxuries  of  the  rich,  which  were  enjoyed  as  much 
by  the  favored  slave  as  by  his  owner,  the  chattel,  if  his  mind 
had  a  philosophic  bent,  would  naturally  regard  the  wretch 
who  toiled  to  contribute  to  his  comfort  as  the  real  slave. 
Liberty  is  a  precious  boon,  but  when  it  brings  no  other  bless- 
ing in  its  train  than  the  right  to  toil  early  and  late  for  a 

*More,  Utopia,  p.  95. 


FORMATION  OF  TRUSTS  377 

meager  subsistence,  or,  worse  still,  merely  confers  on  its 
wretched  possessor  the  privilege  of  starving  to  death  or  of 
being  rescued  from  such  a  fate  by  taking  refuge  in  an  alms- 
house, if  he  cannot  obtain  employment,  it  ceases  to  be  re- 
garded with  excessive  admiration. 

That  the  elevation  of  the  consumer  to  the  first  place  in 
an  economic  system  must  inevitably  result  in  the  conversion 
of  men  nominally  free  into  actual  slaves  is  practically  ad- 
mitted by  such  men  as  Sir  Robert  Giffen,  who  point  to  the 
increase  of  social  wreckage  and  do  not  hesitate  to  attribute 
it  to  the  relentless  workings  of  a  system  which,  on  the 
whole,  they  profess  to  admire,  and  which  they  try  to  defend 
by  citing  facts  tending  to  create  the  impression  that  the 
general  condition  of  mankind  is  being  improved  at  the 
expense  of  the  comparatively  few. 

It  may  be  conceded  that  the  general  improvement  which 
Giffen  and  others  claim  has  taken  place  in  recent  years  has 
really  been  effected,  but  that  it  has  been  brought  about  by 
the  practice  of  an  irrational  and  unscientific  system  of 
trading  is  preposterous.  What  gains  have  been  made  can 
easily  be  traced  to  other  causes  than  the  cheapening  of  prod- 
ucts by  excessive  competition.  The  evils  which  the  latter 
constantly  brings  in  its  train  are  incomparably  greater  than 
the  benefits,  as  we  are  learning  to  our  sorrow. 

Unless  the  world  rejects  the  theory  that  the  consumer's 
interest  must  be  the  first  consideration  of  statesmen  and 
economists  the  inevitable  outcome  will  be  state  socialism 
and  communism  in  its  most  extreme  form.  If  we  continue 
to  act  on  the  assumption  that  we  need  not  regard  "the  low- 
est class  or  residium  of  modern  populations"  so  long  as  "the 
ablest  employers  secure  by  their  struggle  with  rivals"  a  vast 
increase  of  wealth,  a  small  proportion  of  which  they  share 
with  the  population  generally,  we  shall  surely  drift  upon 
the  rock  which  the  antagonists  of  socialism  are  endeavoring 
to  steer  clear  of. 

The  author  from  whom  the  immediately  preceding  quo- 
tations are  extracted  thinks  that  workers  are  as  much  inter- 


378         PROTECTION   AND   PROGRESS 

ested  in  the  maintenance  of  the  competitive  system  as  any- 
body, and  rebukes  the  socialists,  "who  propose  to  aboHsh 
the  competition  by  which  the  workers  benefit,  because  they 
confuse  it  with  competition  by  which  the  workers  suffer."* 
But  the  question  arises :  how  can  the  competition  which  may 
be  beneficial  be  distinguished  from  that  which  is  pernicious, 
or  may  ultimately  prove  so  ? 

One  of  the  features  of  modem  industrialism  is  the  con- 
solidation of  small  establishments  into  one  great  concern, 
combinations  which  are  known  in  this  country  as  trusts.  In 
the  earlier  stage  of  their  existence  these  subsequently  con- 
solidated industrial  establishments  by  their  rivalry  stimulate 
consumption.  But  as  soon  as  competition  becomes  exces- 
sive and  profits  are  reduced  to  a  minimum,  or  operations  are 
carried  on  at  a  loss,  some  one  with  a  capacity  for  organizing 
suggests  a  combination  for  the  purpose  of  diminishing  pro- 
duction, the  object  being  to  arrest  the  fall  of  prices  brought 
about  by  rivalry,  and  to  thus  restore  profits.  It  is  obvious 
that  when  a  process  of  this  kind  is  in  progress  no  one  can 
determine  whether  competition  will  prove  beneficial  or  the 
reverse.  It  is  impossible  under  such  circumstances  to  tell 
whether  rivalry  is  natural — that  is,  responsive  to  supposed 
demands  of  consumers — or  merely  something  promoted  for 
the  purpose  of  compelling  entrance  into  a  trust  in  process  of 
formation  or  into  one  already  formed. 

Much  of  the  competition  of  modern  times  partakes  of 
this  latter  character.  It  is  inspired  by  speculators,  who 
make  no  pretense  of  ascertaining  the  wants  of  existing  or 
prospective  markets ;  their  only  purpose  is  to  make  money 
at  the  expense  of  the  industry  and  sagacity  of  others.  They 
occupy  a  position  in  modern  industrialism  similar  to  that 
held  by  the  robber  barons  of  the  Middle  Ages ;  the  only 
difference  is  that  the  latter  maintained  their  power  over  the 
trading  and  working  classes  of  the  period  by  force  of  arms, 
while  the  depredator  of  to-day  uses  the  more  potent  weapons 
which  custom  and  law  sanction. 

Mallock,  Aristocracy  and  Evolution,  p.   170. 


FORMATION  OF  TRUSTS  379 

Not  only  do  men  practice  blackmail  under  the  guise  of 
rivalry  in  these  days,  but  as  Ernest  von  Halle,  who  has  made 
a  careful  study  of  the  working  of  trusts  in  this  country,  says  : 
"The  organizers  of  some  trusts  have  no  other  purpose  than 
the  creation  of  a  marketable,  of  an  enlarged  opportunity  for 
speculation,  of  which  they  abundantly  avail  themselves"  ;* 
and  he  tells  us  that  these  same  speculators  who  unduly  stim- 
ulate rivalry  for  the  purpose  of  creating  marketable  paper 
occasionally  wreck  their  creations  "in  order  to  give  a  chance 
to  the  spoliation  of  reorganizers." 

In  the  face  of  such  experiences  the  defenders  of  excessive 
competition  find  it  difficult  to  justify  a  policy  of  laissez  faire 
except  in  the  manner  quoted.  They  insist  that  interference 
of  any  kind  must  prove  injurious  to  trade  and  blind  them- 
selves to  the  fact  that  enormously  greater  evils  may  flow 
from  non-resistance.  Mr.  Mallock,  who  tells  us  there  is  a 
competition  by  which  workers  benefit  as  well  as  one  by  which 
they  suffer,  does  not  propose  to  hinder  the  growth  of  the 
latter  kind  of  rivalry,  but,  instead,  treats  his  readers  to  a  de- 
scription of  a  purely  imaginary  class  of  aristocrats  to  whom 
the  destinies  of  the  world  are  to  be  committed  because  they 
have  the  capacity  to  find  work  for  idle  hands  to  do.  In  order 
that  this  aristocratic  class  may  work  successfully  there  must 
be  an  absence  of  all  restraint ;  the  policy  of  let  alone  must  be 
complete. 

Mr.  Mallock,  in  the  development  of  his  "great  man" 
theory,  tells  us  that  "a  large  number  of  the  great  works  of 
antiquity  were  due  to  labor  successfully  stimulated  by  the 
whip.  But,"  he  adds,  "it  is  only  a  man's  commonest  faculties 
that  can  be  called  into  action  thus ;  and  they  can  be  called 
into  action  thus  only  for  this  reason — that  those  who  coerce 
him  know  that  these  faculties  are  possessed  by  him,  and  they 
also  know  the  task  which  they  wish  to  make  him  accomplish. 
But  in  the  case  of  the  great  man  both  these  conditions  are 

*Von  Halle,  Trusts  and  Industrial  Combinations  in  the  United 
States,   p.    137. 


38o         PROTECTION   AND   PROGRESS 

wanting.  It  is  impossible  to  tell  that  he  possesses  any  ex- 
ceptional faculties  till  he  himself  chooses  to  show  them ;  and 
until  circumstances  supply  him  with  some  motive  for  exercis- 
ing them  he  will  probably  be  hardly  aware  that  he  possesses 
such  faculties  himself.  Moreover,  even  if  he  gives  the  world 
some  reason  to  suspect  their  existence,  the  world  will  still 
not  know  what  he  can  do  with  them,  and  will  consequently 
not  be  able  to  impose  on  him  any  task  until  he  himself 
chooses  to  show  of  what  he  is  capable."* 

It  is  to  give  the  great  man  thus  described  an  opportunity 
that  Mr.  Mallock  justifies  unrestrained  competition  and 
deprecates  all  advances  in  the  direction  of  socialism.  We 
may  agree  with  him  to  the  extent  that  the  withdrawal  of 
stimulus  to  exertion  in  the  shape  of  reward  would  prove  a 
fatal  obstacle  to  progress,  but  in  doing  so  we  find  it  impos- 
sible to  assent  to  his  assumption  that  the  superior  minority 
to  whom  all  progress  is  due  is  composed  of  that  class  which 
finds  work  for  human  hands  to  do.  Mr.  Mallock  tells  us 
that  "great  men  do  not  come  into  the  world  ready  made. 
*  *  *  The  philosopher,  the  soldier,  the  inventor,  the  states- 
man, the  great  merchant  or  manufacturer,  achieve  success 
only  by  prolonged  and  intense  effort,  by  study,  by  concen- 
trated thought,  by  action,  by  rude  experience.  Genius,"  he 
adds,  "has  been  defined  as  an  infinite  capacity  for  taking 
trouble ;  and  the  definition,  though  very  incomplete,  is,  so  far 
as  it  goes,  true."* 

Now,  if  all  the  great  men  were  of  the  kind  here  described, 
it  might  be  conceded  that  the  system  which  makes  the  mod- 
ern workingmen  as  serviceable  in  their  hands  as  were  the 
toilers  who  produced  the  great  works  of  antiquity  under  the 
stimulus  of  the  whip  should  be  allowed  to  operate  without 
restraint.  But  as  it  can  be  easily  shown  that  many  if  not  all 
the  great  modern  industrial  enterprises  are  called  into  exist- 

♦Mallock,  Aristocracy  and  Evolution,  p.  zjj. 
*Ibid,  p.  152. 


FORMATION  OF  TRUSTS  381 

ence  by  the  selfish  instinct  which  prompts  men  to  continually 
add  to  their  acquisitions,  and  that  in  most  cases  the  genius 
required  to  carry  them  out,  even  the  inspiring  suggestion, 
comes  from  men  who  are  under  the  spur  of  necessity  and  are 
as  inexorably  driven  to  exertion  by  circumstances  as  the 
toilers  of  antiquity  were  by  the  whip,  it  is  at  once  seen  that 
the  circumstances  which  operated  in  the  days  of  the  Phar- 
aohs are  at  work  in  full  vigor  to-day,  their  form  only  being 
changed.  And  when  we  add  that  the  most  conspicuous 
works  of  the  Pharaohs  were  of  as  much  utility  to  their  build- 
ers as  many  of  those  called  into  existence  by  the  aristocrats 
of  modern  industry,  the  men  who  promote  undertakings  for 
the  sole  purpose  of  earning  dividends  for  stockholders  and 
who  do  not  ask  themselves  whether  their  efforts  will  benefit 
or  harm  their  fellow  creatures,  we  are  making  a  statement 
which  can  easily  be  proved. 

The  pyramids  of  Egypt  may  have  had  a  more  important 
use  that  the  sepulture  of  the  bodies  of  their  creators,  but  the 
proba'bility  is  strong  that  they  owe  their  existence  to  the 
promptings  of  human  vanity  and  superstition.  They  have 
been  the  wonder  of  mankind  for  ages,  and  as  monuments  of 
what  man  can  achieve  they  may  have  justified  their  construc- 
tion. But  as  objects  of  utility  their  value  can  be  expressed 
by  zero.  It  would  be  a  mistake,  however,  to  suppose  that 
the  folly,  or  whatever  it  may  be  called,  which  impelled  the 
rulers  of  ancient  Egypt  to  force  armies  of  men  to  rear  these 
enormous  piles  is  not  matched  in  our  own  days.  When  the 
story  of  the  stupendous  waste  incurred  in  carrying  out  en- 
tirely fruitless  undertakings  in  modern  times  is  told  it  will  be 
seen  that  the  Pharaohs  were  not  able  to  achieve  more  with 
the  aid  of  slavery  and  the  accompanying  lash  than  modern 
speculators  have  accomplished,  and  are  constantly  accom- 
plishing, with  the  assistance  of  legions  of  toilers  who  respond 
to  the  touch  of  the  spur  of  necessity. 

It  is  not  necessary  to  multiply  instances  to  substantiate  this 
charge.    One  case  will  illustrate  the  whole,  but  who  is  it  that 


382         PROTECTION  AND  PROGRESS 

cannot  from  the  leaves  of  his  own  experience  supply  facts 
which  tend  to  show  that  in  modern  times  the  incessant  and 
overpowering  stimulus  of  the  desire  for  money-making  leads 
to  undertakings  in  no  sense  responsive  to  real  needs?  Who 
has  not  at  some  time  or  other  seen  idle  mills,  rendered  use- 
less by  the  arrival  on  the  scene  of  a  fresh  competitor  with 
more  capital  ?  Who  that  has  lived  in  a  city  has  failed  to  note 
the  multiplication  of  warehouses  and  storerooms  when  the 
existing  condition  of  affairs  unmistakably  indicated  that  the 
supply  was  already  largely  in  excess  of  the  demand  ;  and  who 
does  not  know  of  the  construction  of  parallel  lines  of  railroad 
through  countries  which  co«ld  illy  support  a  single  company, 
the  object  of  the  builders  of  the  latest  highway  being  to  com- 
pel the  companies  first  on  the  ground  to  share  their  profits  or 
buy  them  out? 

Measured  by  Mallock's  standard,  the  projectors  of  all 
the  useless  as  well  as  the  genuinely  productive  enterprises 
must  be  regarded  as  "great  men,"  the  aristocracy  of  industry, 
because  they  have  set  the  multitude  at  work.  It  is  true  that 
Mr.  Mallock  speaks  of  "productive  faculties  of  the  highest 
order  which  not  only  minister  to  progress,  but  initiate  it, 
and  which  make,  as  if  by  a  conjuring  trick,  the  hands  of  the 
average  laborer  produce  new  commodities  of  which  he  never 
would  have  dreamed  himself"  ;*  but  his  remarks  on  the  oper- 
ation of  private  capitalism  clearly  indicate  that  his  definition 
of  a  "great  man"  embraces  all  that  class  who  succeed  in 
setting  on  foot  enterprises  which  furnish  some  men  with  an 
opportunity  to  earn  their  subsistence,  and  that  he  does  not 
exclude  from  it  those  who  diminish  the  opportunity  to  earn 
a  living  and  help  to  swell  the  social  wreckage  by  so  doing. 
He  tells  us  that  under  the  regime  of  private  capital  "the 
fitness  or  efificiency  of  each  great  man  in  according  to  the 
acceptability  to  the  public  of  the  goods  or  services  which 
he  offers  them,"  and  he  adds:  "If  the  public  are  not 
pleased  with  these  goods  or  services  they  do  not  buy  or 

♦Mallock,  Aristocracy  and  Evolution,  p.  333. 


FORMATION  OF  TRUSTS  3^3 

demand  them ;  and  the  capital  of  the  man  by  whom  they  are 
offered,  not  being  renewed  by  any  money  received,  melts 
in  his  hands,  and  with  it  his  control  over  other  men's 
labor."* 

Let  us  take  a  modern  instance  and  see  who  the  great 
men  would  be  under  this  definition.  Nothing  could  more 
pertinently  illustrate  the  subject  than  to  epitomize  the  his- 
tory of  an  unnecessary  parallel  railroad.  The  most  of  these 
roads  in  this  country  have  been  called  into  existence  by  men 
who  saw  an  opportunity  to  make  money  by  promoting  a 
new  enterprise,  but  many  of  them  have  been  started  for 
the  deliberate  purpose  of  compelling  an  already  established 
line  to  buy  off  the  blackmailing  projectors.  But  various 
motives  combine  to  prevent  the  nipping  in  the  bud  of  these 
uncalled  for  transportation  facilities  and  some  of  them  are 
carried  to  completion.  Then  ensue  rate  wars  in  which  the 
consumer  for  a  time  enjoys  a  fancied  advantage,  but  which 
are  soon  composed  through  the  instrumentality  of  pools  or 
analogous  devices.  Subsequently  a  combination  is  effected 
and  the  affairs  of  the  amalgamated  lines  are  so  adjusted  that 
the  capital  invested  in  the  superfluous  line  is  made  to  pay 
equally  with  that  invested  in  the  road  really  needed. 

Let  us  take  the  evidence  offered  on  behalf  of  the  great 
men  of  industry  engaged  in  the  railroad  business  by  a  com- 
petent authority  and  see  whether  the  effect  of  promoting 
enterprises  which  give  work  to  men  are  always  beneficial. 
Speaking  of  pools,  which  are  rendered  necessary  by  the 
character  of  the  competition  referred  to  above,  Appleton 
Morgan  says :  "These  pools  are  the  legitimate  and  neces- 
sary results  of  the  rechartering  over  and  over  again  of  the 
railway  companies  to  transact  business  between  the  same 
points  by  paralleling  each  other.  So  long  as  the  people  in 
their  legislatures  will  thus  charter  parallel  lines  serving 
identical  points — thus  dividing  territory  they  once  granted 
entire — it  is  not  exactly  clear  how  they  can  complain  if  the 

*Mallock,   Aristocracy  and   Evolution,  p.    167. 


384         PROTECTION   AND   PROGRESS 

lines  built  (by  money  invested,  if  not  on  the  good  faith  of 
the  people,  at  least  in  reliance  upon  an  undivided  business) 
combine  to  save  themselves  from  bankruptcy.  *  *  * 
Against  the  inequality  of  their  own  rates  and  the  hardship 
of  the  long  and  short  haul  (in  other  words,  against  the  dis- 
crimination of  nature  and  of  physical  laws)  no  less  than 
against  the  peril  of  bankruptcy  and  the  consequent  specula- 
tive tendency  of  their  stocks  (after  which  may  come  the 
wrecking,  the  watering  and  the  vast  individual  fortunes), 
the  railways  of  this  republic  have  endeavored  by  establish- 
ment of  pool  commissions  to  defend  both  the  public  and 
themselves."* 

It  is  not  necessary  for  the  writer  to  point  out  that  he 
does  not  share  the  belief  entertained  by  Appleton  Morgan, 
who  holds  the  theory  that  the  state  should  assist  the  railroad 
first  on  the  ground  to  maintain  its  monopolistic  position. 
The  passage  quoted  is  merely  introduced  to  show  that  the 
ultimate  result  of  unrestrained  competition  in  railroading  is 
combination,  and  that  the  advantage  of  excessive  competi- 
tion to  the  consumer  is  illusory  and  not  real ;  and  to  further 
emphasize  this  fact  an  extended  extract  from  another  publi- 
cation is  introduced  which  will  show  the  process  by  which 
independent  lines  are  merged  into  a  harmoniously  working 
system,  and  the  bad  and  unnecessary  investments  are  made 
to  pay  equally  with  those  responsive  to  real  needs : 

"Take  the  case  of  the  New  York  Central  and  Hudson 
River  Railroad  companies,  which  consolidated  in  1869  with 
a  capital  of  $103,110,137.31.  The  former  of  these  roads 
was  organized  in  1853  by  the  consolidation  of  ten  smaller 
roads  connecting  the  cities  of  Albany  and  Bufifalo.  The 
capital  stock  of  these  companies  amounted  to  $20,799,800, 
of  which  $16,852,870  was  claimed  to  have  been  paid  in. 
Their  funded  debt  was  $2,497,526.  It  is  impossible  at  this 
day  to  ascertain  the  original  cost  of  these  roads,  but  it  is 
certain  that  the  above  sums  represent  about  three  times  the 
amount  actually  expended  for  their  construction. 

♦Morgan,  The  People  and  the  Railways,  pamphlet,   188S. 


FORMATION  OF  TRUSTS  385 

"One  of  the  roads  entering  into  the  consoHdation  was 
the  Utica  and  Schenectady.  It  was  seventy-eight  miles 
long  and  formed  about  one-fourth  of  the  consolidated  line. 
It  had  the  heaviest  grading  and  rock  cutting,  was  the  best 
equipped  and  undoubtedl}'  the  most  expensive,  in  proportion 
to  its  extent,  of  the  ten  roads  out  of  which  the  New  York 
Central  was  created.  The  original  cost  of  this  line  Vv'as 
$2,000,000.  Bonds  were  never  issued  by  the  company.  The 
line  was  profitable  from  the  very  beginning,  paid  regularly 
10  per  cent  dividends — the  limit  to  which  railroad  companies 
were  then  restricted — and  had  a  large  surplus,  which  it 
expended  mainly  for  improvements.  No  assessment  was 
ever  made  on  the  stock  beyond  the  $1,500,000  which  was 
originally  paid  in  by  the  shareholders  and  upon  which  they 
had  drawn  regular  and  liberal  dividends.  Taking  the  orig- 
inal cost  of  this  line  as  a  basis,  it  is  fair  to  presume  that  the 
entire  line  from  Albany  to  Buffalo,  covering  a  distance  of 
297  miles,  did  not  cost  to  exceed  $6,000,000.  These  roads, 
however,  entered  into  the  consolidation  with  a  capital  stock 
of  $15,274,800  and  a  bonded  indebtedness  of  $1,696,326. 

"Estimating  the  cost  of  the  branches  on  the  same  basis 
upon  which  we  have  estimated  that  of  the  main  line,  we  shall 
find  that  the  total  original  cost  of  the  consolidated  lines  can- 
not have  exceeded  $8,000,000.  The  Mohawk  Valley  road 
was  put  in  at  $2,000,000,  and  the  Syracuse  and  Utica  direct 
at  $600,000,  though  the  roads  existed  only  on  paper  and  did 
not  represent  any  value  whatever.  The  Schenectady  and 
Troy  road,  which  went  into  the  consolidation  with  $650,000 
in  stock  and  $90,000  bonds,  had  been  bought  for  less  than 
$100,000  two  months  previous  to  the  consolidation. 

"It  will  thus  be  seen  that  already  nearly  one-third  of 
the  stocks  and  bonds  of  the  consolidated  companies  was 
water.  The  consolidation  agreement  fixed  the  capital  stock 
of  the  New  York  Central  at  $23,085,600  and  its  funded  debt 
at  $11,564,033.62,  increasing  the  stock  over  $2,000,000  and 
the  bonded  debt  over  $9,000,000.  The  latter  was  more  than 
quadrupled,  and  $8,000,000  worth  of  bonds  was,  under  the 

25 


386         PROTECliOi\    AND   PROGRESS 

same  consolidation  certificates,  given  as  a  present  to  the 
stockholder  of  the  new  road.     *     *     * 

"At  the  time  of  the  consolidation  of  the  Hudson  River 
and  New  York  Central  Railroads  the  capital  stock  of  the 
two  roads  had  grown  to  $44,800,000.  Under  the  consolida- 
tion agreement  it  was  fixed  at  $45,000,000.  The  new  com- 
pany also  assumed  all  the  bonded  and  other  indebtedness  of 
both  roads.  If  the  consolidation  manipulators  had  paused 
here  the  capital  of  the  new  company  would  have  been  some- 
what less  than  $60,000,000,  or  more  than  three  times  the 
cost  of  the  property.  But  the  road  was,  under  existing 
rates,  capable  of  earning  dividends  on  a  much  larger  capital, 
and  this  emergency  was  met  by  the  issuance  of  consolidation 
certificates  to  the  amount  of  $45,000,000.  The  total  capital 
of  the  road  was  increased  to  and  made  to  pay  dividends  on 
over  $103,000,000,  while  the  total  cost  of  the  road  and  its 
equipments,  as  claimed  by  the  company  in  1870,  was  less 
than  $60,000,000,  their  estimates  being  based  on  assumed 
consolidation  values  and  the  expenditures  made  from  sur- 
plus earnings.  During  the  same  year  the  gross  earnings  of 
the  company  were  $22,363,320  and  their  net  earnings 
$8,295,240.  In  1880  the  gross  earnings  had  increased  to 
$33,175,913  and  the  net  earnings  to  $15,326,019.  The  com- 
pany was  able  to  declare  in  that  year  11. 81  per  cent, 
dividend  on  iis  $89,500,000  of  fictitious  stock.  In  1890  its 
gross  earnings  were  $37,008,403,  or  $26,050  per  mile,  while 
its  total  aet  earnings  were  $12,516,273.  The  gross  earn- 
ings have  largely  increased  during  the  years  1891  and  1892. 
It  is  safe  to  say  that  $2,000,000  per  annum  would  pay  very 
liberal  interest  and  dividends  upon  the  amount  of  money 
expended  upon  the  construction  of  the  New  York  Central 
and  Hudson  River  Railroad  from  the  proceeds  of  its  bonds 
and  stocks.  By  the  creation  of  fictitious  values  the  managers 
of  the  company  have  atempted  to  impose  an  exorbitant  tax 
upon  the  commerce  and  travel  of  the  country  for  all  time 
to  come. 

"The  case  of  the  New  York  Central  and  Hudson  River 
Railroad  Company  is  only  one  of  the  innumerable  instances 


FORMATION  OF  TRUSTS  387 

of  stock  watering  in  the  history  of  American  railroads,"  says 
the  writer  from  whose  work  this  extended  description  of  the 
method  of  manipulation  is  taken.* 

The  writer  from  whom  the  information  is  derived  fur- 
nishes other  illustrations  equally  striking  and  pertinent  of 
the  facility  with  which  enterprises,  ostensibly  for  the  public 
good,  but  really  having  as  their  chief  object  the  procuring  of 
returns  to  investors,  are  promoted  in  the  United  States. 
Had  he  brought  his  work  down  to  1898  the  author  might 
have  cited  the  purchase  by  a  syndicate,  under  foreclosure 
proceedings  instituted  by  the  United  States  Government,  of 
a  railroad  which  could  have  been  replaced  for  perhaps  half 
the  money  paid  for  it  by  the  purchasers,  who  were  willing  to 
expend  millions  because  they  were  fully  assured  that  under 
the  remarkable  system  which  prevails  in  this  and  some  other 
countries  they  could  easily  compel  the  patrons  of  the  line 
operated  by  them  to  pay  them  handsome  returns  upon  their 
investment. 

Now,  if  Mr.  Mallock  was  called  upon  to  reduce  his  ab- 
stractions to  concrete  propositions  with  illustrations  drawn 
from  the  practices  of  every  day  life  he  might  probably  point 
to  the  creators  of  the  great  Vanderbilt  system  of  railroads  as 
shining  examples  of  his  "great  man"  theory.  A  superficial 
view  of  the  matter  certainly  would  suggest  that  the  Vander- 
bilts  and  their  associates  are  entitled  to  be  considered  "aris- 
tocrats of  industry."  The  lines  operated  by  them  employ 
thousands  of  men  and  they  serve  millions  of  people,  but  a 
close  analysis  of  the  statement  made  by  Larrabee  shows  con- 
clusively that  under  the  guise  of  public  benefactors  the  pro- 
jectors of  the  New  York  Central,  and  other  roads  that  have 
been  similarly  manipulated,  have  usurped  the  functions  of  the 
taxgatherer  and  have  laid  their  plans  for  taking  toll  from  the 
people  until  the  end  of  time. 

The  Pharaohs  of  ancient  Egypt,  when  they  constructed 


♦Larrabee,  The  Railroad  Question,  pp.  165-168. 


388         PROTECTION   AND   PROGRESS 

works  of  public  utility,  such  as  the  mighty  irrigation  lakes 
and  the  enormous  granaries  with  which  the  valley  of  the 
Nile  was  supplied,  idiliough  they  were  hard  taskmasters  and 
applied  the  lash  unsparingly,  were  at  least  sufficiently  mindful 
of  the  obligations  incurred  to  suppy  the  people  out  of  the 
common  slock  of  the  product  of  the  land.  "The  agricultural 
population  in  Egypt,"  says  Sinicox,  "habitually  produced  by 
their  labor  more  food  than  they  consumed.  It  was  the  rule 
for  them  to  produce  enough  for  their  own  maintenance  and 
something  to  spare  for  the  privileged  few ;  this  surplus  was 
withdrawn  from  the  producers  year  by  year,  so  that  they 
themselves  had  no  opportunities  for  accumulating  wealth, 
and  it  was  spent,  so  far  as  its  titular  owners  were  concerned, 
in  unproductive  works.  Considering  the  industrial  organi- 
zation of  the  country,  it  could  not,  however,  have  been  laid 
out  more  to  the  advantage  of  the  laborers.  The  hoards  of 
the  wealthy  served  virtually  as  grain  banks,  upon  which  a 
proportidn  of  the  cultivators  could  draw  for  wages  when 
their  services  were  not  required  to  keep  up  the  food  supplies 
for  current  necessities.  Egyptian  corn  was  not  sent  ovd  of 
the  country  to  buy  foreign  luxuries  or  articles  of  ostentation 
for  which  the  demand  could  be  indefinitely  increased  so  as  to 
swallow  up  all  the  accumulations  of  the  rich ;  neither  was 
the  demand  for  laborers  limited  by  the  power  of  the  capital- 
ist to  drive  a  remunerative  trade  in  the  produce  of  their  work. 
Practically  the  whole  of  the  hoarded  food  was  spent  in  main- 
taining the  'eaters  of  rations,'  and  as  in  no  case  did  they 
expect  or  receive  more  than  maintenance  they  submitted 
without  any  sense  of  injury  to  the  regime  which  caused  the 
spare  labor  of  the  community  (i.  e.,  their  own)  to  be  spent  in 
erecting  royal  monuments,  private  tombs,  temples  of  the 
gods,  and  in  maintaining  officers,  prelates  and  sacred  ani- 
mals, instead  of  in  raising  the  general  standard  of  comfort 
or  luxury. 

"On  the  other  hand,  as  monuments  could  only  be  built  if 
there  were  workers  to  hew  and  drag  the  stones,  and  food  to 


FORMATION  OF  TRUSTS  3^9 

feed  them  withal,  if  the  peasant's  share  of  the  food  supply 
fell  short  of  his  needs,  it  was  taken  for  granted  that  those 
to  whom  his  labor  was  habitually  useful  should  keep  him 
alive,  irrespective  of  any  present  demand  for  his  services ; 
and  in  practice,  no  doubt,  the  masses  were  fed  in  bad  years 
by  free  distribution  of  grain  the  equivalent  of  which  in  labor 
must  have  been  given  as  a  rule,  before  or  after,  not  during 
the  year  of  exceptional  scarcity.  *  *  *  The  relations  be- 
tween all  sections  of  the  community  were  conceived  as  con- 
tinuous, or  lifelong,  and  their  character  w^as  not  altered  by 
temporary  changes  in  the  circumstances  of  one  or  another."* 
A  careful  thinker  will  not  hastily  assent  to  the  proposi- 
tion that  the  condition  of  affairs  resulting  from  this  sys- 
tem was  superior  to  that  produced  in  the  present  day  by 
competition,  but  he  will  be  amply  justified  in  refusing  to 
subscribe  to  the  theory  advanced  by  Mallock  that  men  who 
have  the  ingenuity  to  bring  about  combinations  of  capital 
for  the  creation  of  great  works  of  public  utility,  which, 
after  being  called  into  existence,  are  used  as  engines  to 
extort  from  the  people  for  the  benefit  of  investors  an 
undue  share  of  the  earth's  products,  must  be  regarded  as 
benefactors.  If  they  are,  then  the  captains  of  industry 
in  antiquity  were  incomparably  greater  benefactors,  for 
they  not  only  made  the  opportunity  for  the  laborer  to  toil, 
but  they  recognized  their  obligations  to  maintain  him  at 
all  times.  The  modern  promoter  of  enterprises  refuses  to 
recognize  any  obligation.  He  merely  accumulates  for  his 
own  aggrandizement.  He  takes  advantage  of  the  necessity 
which  forces  men  to  work  to  carry  out  his  plans,  and  when 
he  has  paid  the  wages,  which  are  often  regulated  by  the 
limit  of  subsistence,  he  assumes  that  he  has  done  all  that 
is  required  of  him.  Whether  the  bellies  of  the  masses  are 
full  or  empty  is  no  concern  of  his ;  all  he  asks  is  regular 
returns  on  his  investments,  real   or  fictitious,   so  thaf  he 

*Simcox,  Primitive  Civilizations,  Vol.  I,  pp.  69,  70. 


390         PROTECTION  AND   PROGRESS 

may  enjoy  all  the  fruits  of  the  earth  and  the  power  which 
the  ownership  of  wealth  commands. 

But  Mr.  Mallock  goes  even  further  than  this  comment 
implies.  He  embraces  in  his  list  of  great  men  those  who 
have  no  more  direct  influence  in  promoting  an  industrial 
project  than  to  furnish  the  capital  for  carrying  it  on.  In 
the  scheme  of  modern  industrialism  the  ownership  of  capi- 
tal is  of  infinitely  more  importance  than  the  possession  of 
brains ;  therefore  Mr.  Mallock  may  be  justified  in  accord- 
ing to  the  infant  in  arms,  who  is  represented  by  a  guardian 
in  a  meeting  of  directors  and  shareholders,  as  much  credit 
for  keeping  the  machinery  of  the  universe  in  motion  as 
he  does  to  the  men  of  brains,  who  invent  or  project  enter- 
prises. Mr.  Mallock  would  probably  resent  the  imputa- 
tion that  he  places  the  two  on  the  same  plane,  but  there  is 
no  escape  from  the  conclusion  that  his  argument  really 
amounts  to  such  an  assertion. 

In  another  place  Mallock  tells  us  that  "civilization,  even 
in  its  most  material  sense,  does  not  consist  of  contrivances 
and  inventions  only,"  and  "that  the  industrial  eflficiency 
of  a  community  does  not  depend  solely  on  the  muscles 
of  the  manual  workers  being  given  a  right  direction  so 
that  they  shall  shape  material  objects  in  such  and  such  a 
wa}^  but  it  depends  also  on  the  movements  which  are  pre- 
scribed to  the  men  best  fitted  to  perform  them,  and  being 
prescribed  to  them  in  such  order  that  when  each  movement 
has  to  be  made  the  men  told  off  to  make  it  shall  be  ready 
to  make  it  at  the  moment.  Here  we  see,"  says  he,  "part 
of  the  secret  of  the  success  of  the  great  contractor."* 

There  is  no  doubt  of  this,  but  there  is  good  ground  for 
refusing  to  believe,  as  Mr.  Mallock  evidently  does,  that 
the  great  rewards  offered  Ijy  successful  industry/  fall  to  the 
men  who  work  thus  capably.  He  tells  us  by  way  of  illus- 
tration  that   "a  mechanic   could   with   ten   minutes'   atten- 

*Mallock,   Aristocracy   and   Evolution,   p.    6i. 


FORMATION  OF  TRUSTS  391 

tion  comprehend  the  principle  involved  in  a  cantilever  bridge, 
but  to  design  and  construct  a  bridge  such  as  that  which  now 
spans  the  Forth,  with  its  spans  of  six  hundred  yards  and 
its  altitudes  of  aerial  steel,  implies  an  assimilation  of  our 
multitudinous  existing  knowledge  such  as  is  hardly  to  be 
found  in  a  score  of  engineers  in  Europe."* 

Mr.  Mallock's  estimate  of  the  number  of  engineers  in 
Europe  competent  to  design  a  bridge  of  the  style  and  mag- 
nitude of  that  over  the  Forth  is  a  surprisingly  low  one  and 
seems  to  be  negatived  by  the  experience  of  Americans  in 
bridge  building.  We  think  that  those  competent  to  speak 
will  say  that  whenever  the  money  is  forthcoming  for  such 
an  enterprise  the  engineering  skill  to  design  and  carry  it 
out  successfully  will  be  found  in  abundance  in  this  coimtry 
and  in  Europe.  But  that  is  not  the  point.  The  real  ques- 
tion is :  Do  the  capable  men  who  suggest  and  carry  out 
the  great  modern  industrial  undertakings  receive  their  share 
of  the  rewards  of  industry  as  assumed  by  Mallock?  Is  it 
not  true,  on  the  contrary,  that  they  do  not,  and  that  the 
lion's  portion  is  absorbed  by  the  owners  of  capital  who,  as 
individuals,  play  a  smaller  part  in  the  industrial  economy 
than  the  laborers,  who  at  least  provide  the  brawn  and 
muscle  with   which  undertakings  are  carried  out? 

No  one  familiar  with  the  workings  of  modern  industry 
will  presume  to  deny  that  the  ingenious  and  suggestive 
man  can  as  readily  be  hired  in  these  days  as  the  man  who 
merely  has  strength  and  acquired  skill  to  offer.  It  is  notor- 
ious that  in  the  great  industrial  establishments  men  with 
the  inventive  faculty  are  employed  for  a  salary  on  the  con- 
dition that  the  fruits  of  their  ingenuity  shall  become  the 
property  of  their  employers.  In  the  same  way  men  of 
capacity  are  maintained  by  corporations  who  earn  the  wages 
paid  them  by  making  suggestions  which  are  carried  into 
effect  for  the  benefit  of  shareholders.     It  is  a  mistake  to 


♦Mallock,   Aristocrary  and   Evolution,   p.  8i, 


392         PROTECTION   AND   PROGRESS 

assume  that  men  of  this  caliber  are  scarce.  The  supply  is 
nearly  always  equal  to  the  demand  and  is  continually  in- 
creasing, because  capable  men  without  recognize  the  impos- 
sibility of  competing  with  men  who  have  capital,  and  who 
experience  no  difficulty  whatever  in  hiring  all  the  brains 
they  need  to  carry  out  the  most  difficult  undertakings. 

It  has  been  urged  by  some  writers  who  have  had  this 
fact  forced  upon  their  attention  that,  after  all,  the  really 
great  captains  of  industry  are  those  who  show  proficiency 
as  organizers  and  achieve  success  by  carrying  out  large 
schemes  in  which  high  organization  is  an  essential  factor. 
If  anything  this  is  a  falser  pretense  than  that  contained  in 
the  assumption  of  Mallock  that  it  is  the  capable  men  who 
receive  the  great  rewards  of  industry.  The  organizing 
faculty  is  not  a  rare  one,  as  anyone  may  infer  who  will 
take  the  trouble  to  observe  the  facility  with  which  com- 
binations are  effected.  When  the  design  of  creating  a  trust 
is  formed  it  is  easily  carried  into  execution.  If  the  rewards 
offered  to  those  invited  to  join  it  seem  adequate  the  process 
is  almost  as  simple  as  that  of  causing  the  scattered  globules 
of  a  mass  of  quicksilver  to  coalesce  by  slightly  inclining 
the  surface  on  which  they  rest. 

When  A  is  seized  by  the  notion  that  he  would  like  to 
monopolize  the  trade  hitherto  done  by  his  neighbors,  B, 
C,  D,  E  and  F,  if  he  has  sufficient  capital  all  he  needs  do 
is  to  put  his  enterprise  in  motion  by  hiring  men  of  brains 
to  carry  out  details,  so  called,  which  he  could  not  himself 
execute,  but  a  knowledge  of  which  is  absolutely  requisite 
to  success.  The  project,  with  the  trained  assistance  spoken 
of,  is  then  carried  out  with  ease,  provided  the  amount  of 
capital  is  adequate.  It  is  impossible,  as  everyone  knows, 
under  the  modern  system  for  the  feeble  competitor — that 
is,  one  who  is  illy  supplied  with  capital — to  withstand  the 
encroachments  of  the  owner  of  a  large  capital  who  can  avail 
himself  of  every  resource  for  cheapening  production,  in- 
cluding the  purchase  of  brains. 


FORMATION  OF  TRUSTS  393 

We  need  only  refer  to  the  unquestioned  fact  that  the 
men  of  brains  whose  services  are  so  easily  secured  by  capi- 
tal could,  if  the  capital  was  their  own,  carry  out  under- 
takings of  the  greatest  magnitude  without  assistance.  This 
capacity  it  seems  should,  according  to  the  ideas  advanced 
by  Mallock,  at  least  receive  all  the  industrial  honors  if  not 
the  principal  rewards ;  but  we  know  that  in  practice  this 
is  not  the  case.  The  owner  of  capital  not  only  takes  the 
lion's  share  of  the  earnings  of  industry,  but  false  economic 
teachers  have  persuaded  the  world  to  believe  that  he  is  the 
real  fulcrum  for  the  lever  which  moves  the  universe.  A, 
who  provides  the  hundred  thousand  dollars  to  purchase  and 
operate  the  machinery,  invariably  receives  the  credit,  while 
B,  who  suggested  its  use  and  manages  it  successfully  after 
it  is  installed,  must  be  content  with  a  modest  salary,  which 
is  regulated  by  the  circumstance  that  there  are  plenty  of 
men,  equally  competent,  who  would  cheerfully  take  his  job. 

It  is  not  desirable  in  this  place  to  discuss  the  question 
whether  capital  deserves  to  obtain  all  the  rewards  it  so 
easily  secures.  There  are  obvious  flaws  in  the  theories  of 
the  economists  that,  in  the  main,  capital  is  the  fruit  of 
self-denial,  and  that,  therefore,  its  possessors  are  entitled 
to  all  the  advantages  that  may  be  derived  from  its  owner- 
ship, and  it  may  yet  be  demonstrated  that  the  machinery 
of  the  universe  can  be  made  to  work  smoothly  by  some 
other  means  than  that  of  rapacity  and  greed.  But  such 
a  discussion  would  lead  too  far  from  the  practical  ques- 
tions the  world  is  now  confronted  with :  Whether  no  re- 
strictions whatever  should  be  placed  upon  capital?  and 
whether  its  owners  should  be  allowed  to  freely  combine? 
■  to  make  it  desirable  to  enter  upon  it  in  this  connection. 
What  we  are  concerned  to  learn  now  is  whether  the  con- 
tention of  ATallock  and  others  that  the  unrestrained  com- 
petition of  capital  which  results  in  the  formation  of  com- 
binations and  trusts  is  really  beneficial  to  mankind. 

It  has  been  held  by  eminent  free  traders  that  the  effect 


394         PROTECTION   AND   PROGRESS 

of  unrestrained  competition  is  to  prevent  trusts.  J.  Tiiorold 
Rogers  tells  us  that  "attempts  to  secure  prices  to  producers 
against  competitors  have  constantly  been  made  and  have 
constantly  failed.  The  most  profitable  process  hitherto 
known  and  employed  is  for  strong  men,  or  a  combination 
of  strong  men,  to  ruin  weak  ones  by  low  or  unremunerative 
prices,  and,  having  secured  a  monopoly,  to  commence  a 
legal  pillage  of  the  public.  But  though  the  expedient  may 
enrich  individuals  it  is  essentially  transitory.  Sooner  or 
later  competition  reappears  and  extraordinary  profits  are 
arrested."* 

We  may  justly  suspect  that  this  opinion,  which  was 
expessed  in  one  of  a  series  of  lectures,  the  principal  theme 
of  which  was  free  trade,  does  not  correctly  convey  the 
author's  views,  for  in  another  connection,  when  making  a 
special  study  of  the  subject,  he  arrived  at  a  wholly  differ- 
ent conclusion.  He  asserted :  "We  leave  manufacturers 
to  charge  what  they  please  for  the  process  of  transforming 
raw  material  into  consumable  articles  with  the  conviction 
that  competition  will  be  a  greater  check  to  excessive  rates 
than  market  regulations  could  be.  But  in  the  Middle  Ages 
such  a  notion  would  have  been  repudiated,  and  justly  so. 
Even  now  it  is  doubtful  whether  competition  is  of  universal 
efficacy  and  whether  it  is  not  more  correct  to  say  that  where 
combination  is  possible  competition  is  inoperative."! 

When  a  leading  exponent  of  the  principle  of  laisses 
fairc  is  betrayed  into  making  such  an  admission  as  that 
quoted  and  significantly  suggests,  as  he  does  in  another 
part  of  his  work  sketching  the  career  of  the  English  laborer, 
that  the  outcome  of  excessive  competition  may  be  a  repeti- 
tion of  the  social  disorders  witnessed  in  England  four  or 
five  centuries  ago,  judicious  statesmen  will  be  pardoned 
for  casting  about  for  a  remedy  which  may  mitigate  if  it 


♦Rogers,  Industrial  an3  Commercial  History  of  England,  p.  178, 
j- Rogers,  Six  Centuries  of  Work  and  Wages,  p.  139. 


FORMATION  OF  TRUSTS  395 

cannot  entirely  eliminate  the  evil.  Our  writer  tells  us 
that  the  conviction  entertained  in  some  quarters  that  the 
rights  of  labor  may  be  safely  disregarded  leads  to  dangerous 
consequences.  He  says,  speaking  of  the  agriculturalist,  that 
"it  is  true  that  in  the  rudest  agricultural,  and  even  in  the 
rudest  pastoral  age,  the  labor  of  the  individual  always  pro- 
duces more  than  is  requisite  for  himself  and  his  famfiy. 
He  can,  therefore,  be  made  to  maintain  others  on  his  labor. 
Some  of  these  consumers  will  benefit  him  by  increasing  his 
comforts,  by  allowing  him  to  devote  his  undivided  attention 
to  his  own  industry  or  calling,  and  by  furnishing  him  with 
economies  in  the  conduct  of  his  business.  Some  will  quar- 
ter themselves  as  a  right  or  by  force  on  his  labors  and  their 
produce  and  will  color  their  usurpation  by  alleging  that  he 
owes  them  allegiance  or  duty.  These  claims  are  always 
most  insolent  and  incessant  when  society  is  barbarous.  As 
it  becomes  civilized,  people  reiterate,  with  apparent  rea- 
son, that  only  the  criminal  and  the  utterly  destitute  are  bur- 
dens on  society,  and  that  they  who  provide  the  pageantry, 
or  are  recognized  as  the  ornaments  of  civil  life,  represent 
the  highest  utilities.  It  is  to  be  hoped  that  labor  and  pov- 
erty are  satisfied  with  this  assurance  and  are  convinced 
that  these  pretensions  are  founded  on  a  solid  basis  of  facts. 
It  will  be  found  in  the  course  of  English  social  history  that 
the  assurance  has  been  occasionally  disputed  and  the  pre- 
tensions severely  criticised.  It  is  possible  that  the  temper 
which  disputes  or  criticises  may  occur  in  force  hereafter 
when  it  is  not  anticipated  or  expected."* 

It  is  evident  from  the  general  tenor  of  the  writings  of 
Professor  Rogers  that  he  did  not  have  capitalists  particularly 
in  mind  when  he  penned  the  foregoing  sentences,  but  there 
is  no  doubt  that  the  aggressions  of  this  class  are  as  great, 
and  in  modern  times  the  workings  of  the  system  which 
produces  them  are  fully  as  bad,  as  any  of  those  more  par- 

*Rogers,  Six  Centuries  of  Work  and  Wages,  p.  159. 


396        PROTECTION  AND  PROGRESS 

ticularly  referred  to  by  him  in  his  diatribe  against  the  classes 
that  fortune  or  other  circumstances  have  in  past  periods 
quartered  on  the  toilers  of  the  world.  Rogers,  although 
his  works  are  brimful  of  sympathy  for  the  laborer,  was 
constained  by  the  economic  theory  he  had  adopted  to.  give 
an  almost  unqualified  support  to  the  idea  that  it  would  be 
a  crime  against  progress  to  interfere  with  the  tendency  to 
heap  up  large  capitals.  He  shared  the  view  of  those  pro- 
fessional economists  who  believe  that  the  universe  would 
be  brought  to  a  standstill  if  the  privileges  of  capital  were 
abated.  Like  them,  he  seems  to  have  lost  sight  of  the  fact 
that  the  creation  of  capital  must  go  on  unceasingly  and 
that  it  does  not  require  extraordinary  efforts  to  create  it 
or  coddling  to  keep  it  alive.  If  all  that  now  in  existence 
were  wiped  out  it  would  be  renewed  in  a  comparatively 
brief  period.  We  have  the  authority  of  John  Stuart  Mill 
for  the  statement  that  "capital  is  kept  in  existence  from 
age  to  age  not  by  preservation,  but  by  perpetual  reproduc- 
tion :  Every  part  of  it  is  used  and  destroyed  generally  very 
soon  after  it  is  produced,  but  those  who  consume  it  mean- 
while are  employed  in  producing  more."* 

If  we  carefully  consider  that  there  is  no  such  thing  as 
"old  capital"  and  then  observe  how  in  practice  the  pleasures 
and  powers  derived  from  the  possession  of  capital  may  be 
indefinitely  perpetuated  we  can  form  an  ipipression  of  thQ 
injury  that  may  result  from  the  adoption  of  a  false  economic 
notion  such  as  that  involved  in  the  assumption  that  capi- 
tal needs  special  protection  and  encouragement.  An  illus- 
tration derived  from  the  actual  working  of  the  capitalistic 
system  will  demonstrate  the  accuracy  of  Mill's  observa- 
tion that  capital  is  extremely  destructable,  and  it  will  also 
show  that  its  possession  does  not  imply  that  the  own^r 
who  enjoys  an  income  from  capital  is  always  receiving 
the  deserved   reward  of  abstention.     Let  us  suppose  that 

♦Mill,  Principles  of  Political  Economy,  Vol.  I,  p.  io8. 


FORMATION  OF  TRUSTS  397 

A,  some  two  hundred  years  ago,  by  the  exercise  of  economy, 
was  able  to  set  aside  ten  thousand  dollars,  which  he  suc- 
cessfully invested,  receiving  as  returns  profits  amounting 
to  ten  per  cent,  annually — not  an  excessive  estimate.  If 
he  and  his  successors  managed  during  the  whole  interven- 
ing period  to  receive  half  of  that  amount,  and  at  the  end 
of  it  they  still  maintained  the  capital  unimpaired,  they 
would  have  been  repaid  tenfold.  But  this  is  only  part  of 
the  gains.  The  nominal  amount  of  the  capital  may  have 
remained  unchanged,  but  owing  to  the  appreciation  of  the 
value  of  money  and  to  improvements  in  machinery,  trans- 
portation and  to  other  causes  it  may  have  doubled  its  earn- 
ing power  during  the  interval.  Thus  we  see  that  in  spite 
of  the  destructability  of  real  capital,  a  fiction  of  convention 
not  only  makes  it  indestructable,  but  actually  increases  the 
value  of  the  representative  of  the  thing  destroyed. 

If  to  this  automatic  feature  of  adding  to  its  bulk  and 
potentiality  which  capital  possesses,  we  add  the  possibilities 
resulting  from  its  manipulation  during  the  course  of  two 
hundred  years  we  may  find  the  original  capital  swelled 
to  millions.  That  this  is  no  exaggerated  presentation  of 
the  workings  of  the  capitalistic  system  is  shown  by  the 
experience  of  the  Vanderbilts.  It  was  the  original  small 
earnings  of  the  Commodore,  derived  from  his  ferryboat, 
which  were  expanded  into  the  colossal  fortunes  now  owned 
by  his  descendants.  The  method  by  which  this  expansion 
was  eflfected  is  accurately  outlined  in  the  sketch  of  the 
creation  of  the  great  Vanderbilt  system  of  railroads  which 
forms  part  of  this  chapter. 

It  is  the  recognition  of  facts  such  as  these  that  makes 
it  impossible  for  the  thinking  part  of  the  masses  to  assent 
to  the  proposition  that  the  earnings  of  capital  are  merely 
the  fair  rewards  which  society  offers  those  who  are  willing 
to  practice  self-denial  in  order  to  lay  by  something  for  a 
future  rainy  day.  It  is  clearly  seen  by  the  least  discr-min- 
ating  that  the  abuses  which  the  system  brings  in  its  train 


398         PROTECTION   AND   PROGRESS 

exceed  the  benefits  it  confers,  and  the  perception  of  this 
arouses  animosity  against  the  promoters  of  combinations 
and  the  accumulators  of  great  fortunes.  It  does  not  need 
the  admission  of  men  like  Mill  to  convince  the  people  that 
a  method  superior  to  that  which  is  now  employed  to  keep 
the  machinery  of  production  in  motion  may  be  devised, 
and  the  demand  for  this  improvement  is  sure  to  continue 
until  it  is  effected.  Rogers,  extreme  as  he  was  in  his  advo- 
cacy of  the  "let  alone"  policy,  saw  this  clearly,  and  so 
did  the  writer  of  "Aristocracy  and  Evolution,"  for  his  essay 
from  beginning  to  end  is  a  vain  effort  to  bulwark  privi- 
lege against  the  future  torrential  demand  for  a  better  order- 
ing of  things,  one  in  which  the  good  of  society  and  the 
rights  of  man  will  be  elevated  above  vested  rights  founded 
on  centuries  of  legalized  robbery. 

The  adherents  of  protection  in  this  country  instinctively 
recognized  the  abuses  to  which  mankind  are  subjected  by 
unrestrained  competition.  They  saw  the  potentiality  of 
capital  and  attempted  to  abridge  the  powers  of  its  owners 
by  limiting  the  area  of  competition.  They  realized  that 
if  no  effort  were  made  to  diversify  production  in  their  own 
country  its  people  must  necessarily  occupy  the  position  of 
hewers  of  wood  and  drawers  of  water  for  the  inhabitants 
of  countries  where  large  capitals  had  already  been  accumu- 
lated. They  did  not  look  upon  capital  as  something  inher-- 
ently  harmful,  but  they  knew  that  its  possessors  were  armed 
with  the  power  to  do  harm  and  would  not  shrink  from  doing 
it,  provided  their  own  interests  were  enhanced  thereby. 
Their  policy  was  to  stimulate  the  creation  of  a  domestic 
capital,  an  aim  which  could  not  be  carried  out  if  they  de- 
voted themselves  to  the  production  of  those  rude  products 
of  which  Adam  Smith  said  great  quantities  are  perforce 
exchanged  for  small  quantities  of  manufactured  articles. 
Therefore  they  resorted  to  the  plan  of  repulsing  the  aggres- 
sions of  foreign  capitalists,  with  the  result  described  else- 


FORMATION  OF  TRUSTS  399 

where  of  creating  an  enormous  home  capital  and  a  tremen- 
dous  domestic  manufacturing   industry. 

The  problem  now  is  to  curtail  the  power  of  the  owners 
of  the  domestic  capital  thus  called  into  existence.  It  is 
one  that  modern  protectionists  will  not  shrink  from  meet- 
ing. Those  who  adhere  to  the  idea  that  a  restriction  of 
the  area  of  competition  is  beneficial  will  not  be  restrained 
by  the  predictions  of  the  theorists  who  contend  that  inter- 
ference with  the  free  play  of  capital  must  always  prove 
disastrous.  The  warnings  of  the  men  who  urged  that  pro- 
tection would  be  an  obstacle  to  the  creation  of  a  great 
manufacturing  industry  and  fatal  to  external  trade  will 
not  deter  protectionists  from  carrying  their  reforms  fur- 
ther. While  they  perceive  all  the  dangers  resulting  from 
enormous  aggregations  of  capital  they  are  not  disposed  to 
become  pessimistic  and  surrender  the  belief  they  entertain 
that  a  policy  which  recognizes  the  employment  of  private 
capital  under  proper  restraint  is  wise,  and  that  competi- 
tion within  reasonable  limitations  will  do  more  for  the 
world  than  a  resort  to  socialism. 

It  has  not  escaped  the  attention  of  modern  economists 
that  the  advanced  thinkers  of  the  socialistic  school  look 
with  pleasure  on  the  tendency  to  combine  and  that  they 
regard  with  disfavor  all  attempts  to  restrain  the  formation 
of  trusts.  The  fact  is  not  without  significance  that  social- 
ists and  communists  are,  as  a  rule,  opponents  of  protection. 
Henry  George,  with  his  iconoclastic  proposition  to  overthrow 
the  principle  of  private  ownership  in  land,  was  an  extreme 
advocate  of  laissez  faire.  All  these  apostles  of  the  new 
dispensation  are  firmly  convinced  that  nothing  can  more 
speedily  bring  about  a  realization  of  their  desire  than  to 
permit  the  free  adoption  of  the  modern  trust  system.  They 
argue  that  if  a  combination  of  a  score  of  railroads  un3er 
one  management  can  be  eflfected,  and  that  if  fifteen  or 
twenty  thousand  miles  of  roads  can  be  more  sucessfully  con- 
ducted by  one  manager  than  under  a  score  of  managers 


400         PROTECTION   AND   PROGRESS 

the  demonstration  will  at  length  impress  the  people  and 
they  will  ask  themselves  why  the  whole  of  society  should  not 
undertake  to  perform  what  a  section  of  it  accomplishes 
with  such  apparent  ease.  They  rely  upon  this  conclusion 
being  speedily  reached  when  there  is  no  longer  any  ques- 
tion regarding  the  chief  beneficiaries  of  this  effective  organi- 
zation. 

When  it  becomes  perfectly  clear  that  the  inevitable  ten- 
dency of  unrestrained  combination  is  to  make  the  ricli 
richer  and  the  poor  poorer  the  socialists  think  there  will 
be  no  trouble  in  carrying  out  their  purpose  of  overturning 
the  existing  social  organization  and  substituting  in  its  stead 
some  form  of  state  socialism.  Many,  indeed,  go  further 
and  hope  to  dispense  with  all  forms  of  control  and  pro- 
fess to  believe  that  anarchy  will  do  more  to  elevate  the 
condition  of  man  than  order.  These  latter  have  evidently 
modeled  their  ideas  upon  those  of  the  most  advanced  free 
traders,  who  have  systematically  taught  that  absolute  free- 
dom in  trade  and  the  manipulation  of  markets  is  essential 
to  progress.  It  is  not  a  far  away  cry  from  tliat  of  free- 
dom to  adulterate,  or  the  right  to  take  advantage  of  the 
necessitous,  or  to  crush  out  the  opportunities  of  rivals  to 
earn  a  living,  or  to  commit  any  of  the  enormities  sanctioned 
by  the  doctrine  of  unrestrained  competition,  to  that  which 
the  anarchists  raise  when  they  say  that  man  would  be  bel- 
ter in  every  way  if  he  were  left  free  to  do  as  he  pleases, 
unret-trained  by  convention  or  law. 

There  can  be  no  doubt  that  the  pushing  of  the  doctrine 
of  laisses  faire  to  extremes  would  ultimately  bring  the 
world  to  socialism  or  anarchism.  The  gloomy  forebodings 
of  Rogers  and  other  free  traders  show  that  they  fear  such 
a  result.  The  sagacious  Bismarck  divined  the  danger  and 
urged  a  policy  of  modified  state  socialism,  which  was  adopted 
and  has  been  adhered  to  by  Germany  for  many  years,  but  it 
has  not  succeeded  in  stemming  the  tide.  Great  Britain,  a 
country  whose  leading  philosophers  at  one  time  thought  it 


FORMATION   OF   TRUSTS  401 

would  be  impossible  to  draw  into  the  socialistic  maelstrom, 
is  inundated  with  "isms"  which  threaten  some  day  to  make 
short  work  of  private  ownership  in  land,  and  has  had  im- 
posed on  it  a  counter  system  of  combination  in  the  form 
of  trades  unionism,  which,  in  its  efforts  to  overcome  the 
effects  of  excessive  competition,  is  constantly  paralyzing 
industry. 

Surely  the  possibility  of  such  a  fate  as  that  which  is 
ever  present  in  the  imagination  of  the  opponents  of  social- 
ism should  make  them  study  methods  of  averting  what  they 
conceive  to  be  an  evil  which  would  arrest  the  progress  of 
the  world.  If  they  are  convinced  that  competition  is  essen- 
tial to  human  advancement  they  should  endeavor  to  mini- 
mize the  abuses  which  it  brings  in  its  train.  If  there  is 
any  foundation  for  the  assumption  that  combinations  have 
it  in  their  power  to  nullify  competition — and  upon  this 
point  there  can  be  no  doubt — they  should  be  made  impossi- 
ble. No  pretense  that  the  high  organization  effected  by 
combinations  which  results  in  economies  in  management 
and  the  use  of  processes  that  inure  to  the  benefit  of  the 
consumer  should  influence  those  who  make  our  laws.  In 
most  instances  analysis  will  disclose  that  the  economies  of 
combines  do  not  result  in  benefits  to  consumers.  It  is  true 
that  the  price  of  a  service  performed  by  a  trust  will  often 
show  a  great  decline  as  compared  with  the  period  before 
the  combination  was  effected,  but  it  must  not  be  overlooked 
that  the  commodities  produced  by  individual  exertion  have 
also  declined  in  value.  It  is  the  boast  of  the  managers  of 
the  great  systems  of  railroads  in  this  country  that  they 
have  enormously  reduced  the  cost  of  carriage,  and  they 
point  to  this  fact  to  sustain  their  claim  that  consolidation 
has  benefited  the  public,  but  they  ignore,  what  is  easily 
susceptible  of  proof,  that  the  value  of  the  commodities  they 
haul  has  declined  more  heavily  than  railroad  freight  rates. 
It  is  a  very  telling  argum.cnt  to  emphasize  the  fact  that 
the  average  charge  for  hauling  a  ton  of  goods  one  mile 

26 


402         PROTECTION   AND   PROGRESS 

has  declined  from  1.925  cents  in  1867  to  .806  in  1896,* 
but  it  does  not  seem  so  striking  when  we  consult  a  table 
of  prices  and  learn  that  corn  was  worth  $1.17  a  bushel  in 
1867  and  44  cents  in  1896;  or  wheat  $1.34  a  bushel  in  the 
first  named  year  and  67  cents  in  the  latter.  Or  that  oats 
fell  from  $1.16  to  49  cents  during  the  same  period.f 

A  careful  consideration  of  this  phase  of  the  subject 
will  lead  to  the  conclusion  that  combinations  are  not  made 
for  the  purpose  of  reducing  prices  or  for  the  benefit  of  the 
public,  but  that  their  sole  object  is  to  stifle  competition. 
Whatever  savings  may  be  effected  by  economies  in  man- 
agement or  production  are  enjoyed  by  the  shareholders  of 
trusts  and  not  by  the  community  in  which  they  are  oper- 
ated. As  a  result,  owners  of  capital  are  enabled  to  swell 
their  possessions  enormously,  and  concurrently  they  increase 
their  ability  to  maintain  control  in  their  chosen  fields  of 
operation.  Frequently  they  go  further  and  form  trusts 
that  are  virtually  all  embracing.  Combinations  of  this  kind 
are  successfully  carried  on  in  this  and  other  countries. 
The  tendency  to  reach  out  in  every  direction  is  so  well 
understood  that  in  many  States  of  the  American  Union 
the  laws  forbid  corporations  doing  any  other  kind  of  busi- 
ness than  that  for  which  they  are  incorporated.  But  pro- 
visions of  this  kind  prove  unavailing,  for  their  spirit  is 
easily  evaded  by  the  formation  of  numerous  apparently 
separate  bodies  which  are  practically  one,  as  may  be  seen 
from  the  fact  that  their  officers  are  the  same,  their  posi- 
tions only  being  slightly  varied.  In  some  cases  even  this 
pretense  is  not  kept  up. 

What  has  been  written  here  in  relation  to  combinations 
does  not  describe  a  state  of  affairs  peculiar  to  this  country. 
It  is  often  assumed  by  the  Cobdenites  that  trusts  are  the 
product  of  protection,  but  there  is  absolutely  no  ground 

*"Changes  in  the  Rates  of  Charge  for  Railway  and  Transportation 
Services,"  Publication  of  U.  S.  Dept.  of  Agriculture,   1898,  p.  12. 
flbid,  p.   78. 


FORMAT,! ON   OF   TRUSTS  403 

for  the  assumption.  Combines  flourish  in  free  trade  Eng- 
land as  luxuriantly  as  in  this  country.  Rogers  and  other 
free  trade  writers  testify  to  this  fact,  and  long  lists  of 
successful  British  syndicates  could  easily  be  supplied  if 
necessary  to  substantiate  their  testimony.  But  no  such 
proof  is  required.  The  causes  that  produce  trusts  are 
too  easily  perceived  and  understood  to  permit  any  mistake 
on  this  point.  They  are  due,  as  has  been  shown,  to  the 
facility  with  which  capital  can  be  drawn,  under  the  mod- 
ern joint  stock  company  system,  into  undertakings  which 
promise  profit;  therefore  they  are  certain  to  flourish  wher- 
ever the  laws  encourage  the  formation  of  corporations  and 
extend  to  them  a  degree  of  protection  which  the  isolated 
individual  is  unable  to  obtain. 

Obviously,  then,  the  remedy  for  the  disease  must  be  a 
rational  one,  and  it  must  be  sought  for  in  the  direction 
of  restraint.  It  is  manifestly  absurd  to  assume  that  the 
evil  can  be  abated  by  intensifying  the  causes  which  have 
brought  it  about.  There  is  nothing  so  clear  as  the  fact 
that  excessive  competition  promotes  combinations.  If  com- 
petition is  severe  enough  in  a  country  of  seventy  million  in- 
habitants to  call  great  trusts  into  existence  what  would  hap- 
pen if  competition  were  absolutely  unrestrained  through- 
out the  whole  world  ?  The  fluidity  of  capital  is  well  recog- 
nized in  these  days,  and  the  facility  with  which  it  can  be 
induced  to  lend  itself  to  employment  in  enterprises  of 
the  most  cosmopolitan  character  is  understood  by  those 
who  make  it  a  business  to  manipulate  financial  affairs.  If 
the  tariff  barrier  set  up  by  this  country  did  not  exist  Amer- 
ican trusts  would  be  international  trusts.  As  it  is,  there 
are  already  monstrosities  of  this  character,  and  they  will 
undoubtedly  be  multiplied  in  the  future  unless  the  laws  in 
restraint  of  combinations  in  this  country  are  made  more 
effective. 

That  they  may  be  no  one  doubts  who  has  given  the  mat- 
ter intelligent  study.     That  the  problem  presents  some  grave 


404         PROTECTION   AND   PROGRESS 

difficulties  is  true,  but  they  are  not  insurmountable.  It 
may  be  admitted  once  for  all  that  the  legislation  thus  far 
enacted  does  not  hold  out  much  hope.  So  long  as  our 
legislators  proceed  on  the  assumption  that  it  is  possible  to 
single  out  those  corporations  which  aim  at  the  stifling  of 
competition  from  those  formed  for  the  purpose  of  conduct- 
ing business  under  a  fair — that  is  to  say,  a  moderate — sys- 
tem of  competition,  there  will  be  no  abatement  of  the  evil. 
The  law  can  hardly  distinguish  between  corporations 
of  this  kind.  In  its  eyes  size  does  not  figure.  If 
modest  corporations  are  recognized  as  benefits  the  co-opera- 
tion they  imply  when  effected  on  larger  scale  will  not  be 
regarded  by  the  lawmaker  as  an  evil.  Therefore  attempts 
to  prevent  the  formation  of  trusts  by  laws  are  not  likely 
to  succeed  in  countries  where  the  advantages  of  the  co-oper- 
ation made  possible  by  incorporation  are  recognized. 

But  while  such  laws  are  likely  to  prove  negligible  quan- 
tities there  is  a  way  of  reaching  combinations,  and  that 
is  by  a  resort  to  the  taxing  power.  If  the  people  are  con- 
vinced that  there  is  no  foundation  for  the  claim  that  the 
consolidation  of  vast  amounts  of  capital  inures  to  their  bene- 
fit they  may  by  a  graduated  system  of  taxation  successfully 
prevent  the  creation  of  overshadowing  trusts.  Such  a  course 
is  possible  in  a  country  which  refuses  to  assent  to  the 
proposition  that  the  government  has  no  right  to  interfere 
with  the  operations  of  trade,  but  it  could  never  be  followed 
in  lands  where  the  Cobdenite  idea  of  unrestricted  compe- 
tition prevails,  for  that  only  contemplates  conserving  the 
interests  of  the  consumer.  That  is  the  corner  stone  of  the 
structure  of  Cobdenism,  and  if  it  is  destroyed  the  whole 
edifice  must  tumble. 

A  consistent  Cobdenite,  although  he  may  indulge  in 
contradictions  such  as  we  have  pointed  out  in  the  case  of 
Professor  Rogers,  will,  on  the  whole,  contend  that  trusts 
are  beneficial  because  they  result  in  competition  on  a  mag- 
nified scale;  but  the  protectionist,  who  insists  that  the  first 


FORMATION   OF   TRUSTS  405 

consideration  of  statesmen  should  be  the  interests  of  the 
producer,  is  bound  to  antagonize  the  tendency  to  combine 
because  be  clearly  sees  that  its  effect,  no  matter  what  may 
be  the  apparent  benefits  in  the  shape  of  economies  in  man- 
agement and  production,  is  to  constantly  enlarge  the  volume 
of  the  unemployed  and  increase  the  social  wreckage  which 
free  traders  appear  to  think  should  not  be  taken  into  account. 
In  short,  protectionists  believe  that  no  economic  scheme 
which  does  not  elevate  the  producer  to  the  first  place  can 
succeed ;  those  who  differ  from  them  and  advocate  giving 
all  the  advantage  to  the  consumer,  under  the  specious  pre- 
tense that  there  is  no  substantial'  difference  between  the 
producing  consumer  and  the  consumer  who  does  not  pro- 
duce, are  conscious  or  unconscious  breeders  of  revolution 
and  destroyers  of  empire. 


CHAPTER  XVIII. 
TWO  KINDS  OF  CONSUMERS. 

INTERESTS   OF   THE    NON-PRODUCER    AND   THE    PRODUCER    NOT 

IDENTICAL. 

The  distinction  between  non-productive  and  productive  consumers — 
Power  enjoyed  by  the  owners  of  capital — Capital  not  always 
the  fruit  of  self-denial — The  result  of  automatic  saving— Exces- 
sive saving  leads  to  diminished  consumption  and  to  congestion 
of  capital  and  lack  of  employment — The  problems  which  over- 
production force  on  tKe  economist — The  land  tax  theory  of 
Henry  George — Free  land  does  not  necessarily  promote  the 
progress  of  a  nation — The  earth  yields  its  best  results  when 
private  owners  control  its  service — Every  man's  land  is  no  man's 
land — Rogers'  advocacy  of  restraint  of  middlemen — Trusts  the 
natural  outcome  of  unrestrained  competition — Possible  effects 
of  the  disturbance  of  the  system  of  superfluous  middlemen — The 
non-producing  classes  in  the  United  States — Admitted  dangers 
of  disturbing  the  existing  wasteful   system. 

Of  all  the  specious  arguments  advanced  by  the  Cobden- 
ites  in  favor  of  unrestricted  competition  none  is  more  decep- 
tive than  that  which  attempts  to  defend  the  cheapening  of 
products  on  the  ground  that  the  consumer  is  benefited. 
Its  misleading  character  is  instantly  perceived  by  those  who 
take  the  trouble  to  inquire  whether  all  consumers  stand  on 
the  same  plane.  Such  investigators  at  once  discover  that 
there  are  two  classes  of  consumers,  and  that  their  interests 
are  diametrically  opposed. 

The  necessity  that  all  men  labor  under  of  being  com- 
pelled to  consume  the  products  of  the  soil  and  the  work- 
shop in  a  greater  or  less  degree  has  been  taken  advantage  of 

by   the   Cobdenites,   who,   by   ingeniously   suppressing  the 

406 


CONSUMERS  407 

fact  that  a  large  proportion  of  mankind  does  not  exert  it- 
self in  any  manner  to  increase  the  general  store  of  wealth, 
endeavor  to  create  the  impression  that  all  consumers  have 
an  equal  interest  in  reducing  the  cost  of  production.  The  fal- 
lacy of  the  assumption  is  easily  detected  by  those  who  do  not 
wish  to  be  deceived.  Such  persons  need  only  ask  them- 
selves what  are  the  relations  to  each  other  of  the  two  en- 
tirely distinct  classes  in  every  community — the  producers 
and  non-producers. 

It  is  true  that  both  are  consumers,  but  it  is  obvious  that 
the  producing  consumer  and  the  non-producing  consumer 
are  differently  afifected  by  the  reduction  of  the  cost  of  prod- 
ucts. If  we  take  for  illustration  the  case  of  a  primitive  com- 
munity in  which  the  art  of  living  at  the  expense  of  others 
has  not  been  developed,  and  in  which  barter  is  the  sole 
method  of  effecting  exchanges,  every  improvement  in 
the  method  of  production,  and  every  transfer  of  property, 
no  matter  under  what  conditions,  inures  to  the  general  ben- 
efit. But  in  such  a  society,  all  being  workers,  all  share  in 
the  gains,  whether  they  are  the  result  of  nature's  bounty  or 
of  increased  skill.  If  the  country  is  pastoral  we  may  be 
reasonably  certain  that  when  ten  sheep  are  exchanged  for 
one  cow,  where  formerly  the  exchange  was  five  for  one,  the 
later  transaction  was  a  fair  one  to  both  participants.  In 
the  case  of  the  owner  of  the  sheep  the  increase  in  his  flocks 
would  in  all  probability  have  been  due  to  the  care  with 
which  he  tended  them,  or,  at  least,  to  the  propitiousness  of 
the  seasons ;  therefore  he  would  have  no  cause  for  com- 
plaint because  his  relative  abundance  compelled  the  altera- 
tion of  the  ratio  of  exchange ;  and  the  owner  of  kine  who 
received  twice  as  many  sheep  would  have  no  fault  to  find. 
If  the  proportions  should  be  changed  still  more  materially, 
and  one  cow  was  rated  as  worth  twenty  sheep,  the  barter 
would  still  be  fair  unless  the  condition  which  induced  the 
owner  of  the  sheep  to  increase  his  offerings  was  produced  by 
a  monopoly.     So  long  as  the  barter  remained  natural  and 


4o8         PROTECTION   AND   PROGRESS 

merely  represented  an  exchange  of  things  not  desired  for 
those  which  were  no  serious  trouble  could  arise. 

The  failure  to  recognize  the  changes  wrought  by  the 
advance  from  a  simple  to  a  complex  system  of  trading  has 
carried  many  economists  far  from  the  path  of  correct  rea- 
soning. The  obvious  necessity  of  exchange,  and  the  fair- 
ness attending  transactions  in  which  the  moving  consid- 
eration of  the  actors  was  desire  on  the  part  of  each  to  obtain 
something  possessed  by  the  other,  has  blinded  many  to  the 
fact  that  a  third  factor  of  vast  importance  has  been  intro- 
duced— namely,  the  employment  of  a  medium  of  exchange. 
The  far-reaching  consequences  of  the  introduction  of  this 
intermediary  have  been  seen  by  some  economists,  but  most 
of  them  have  minimized  its  effects  when  discussing  its  rela- 
tions to  the  subject  under  consideration. 

This  is  said  in  the  full  consciousness  that  the  definitions 
of  money  are  numerous  and  some  of  them  exact,  and  that 
many  of  them  lay  stress  on  its  important  function  of  stor- 
ing values.  But  an  analysis  of  the  work  of  the  most  con- 
sistent writers  invariably  reveals  the  existence  of  a  confu- 
sion of  mind  due  to  the  tendency  to  underrate  the  injurious 
effects  of  what  has  been  called  automatic  saving;  or,  to 
put  it  in  another  way,  the  value  of  capital  has  been  empha- 
sized to  such  an  extent  that  nearly  all  writers  on  economic 
questions  have  ceased  to  perceive  that  it  may  be  employed 
as  an  instrument  of  oppression,  and  that  when  its  owners 
are  permitted  to  use  it  as  their  interests  dictate  they  may 
wiekl  a  power  as  great  as  that  exercised  by  the  most  des- 
potic rulers. 

In  a  passage  from  Rogers,  quoted  in  the  preceding 
chapter,  we  find  a  just  comment  on  the  aggressions  to  which 
the  producer  is  subjected  by  a  class  which  assumes  a  pre- 
scriptive right  to  live  at  the  expense  of  the  exertions  of 
others.  Speaking  of  the  agriculturist,  he  says:  "However 
scanty  may  be  his  share  in  the  distribution  of  wealth,  except 
he  abide  in  the  ship  none  can  be  safe.     In  the  rudest  agri- 


CONSUMERS  409 

cultural  and  even  in  the  rudest  pastoral  age  the  labor  of 
the  individual  always  produces  more  than  is  requisite  for 
himself  and  his  family.  He  can,  therefore,  be  made  to  main- 
tain others  on  his  labor.  Some  of  these  consumers  will  ben- 
efit him  by  increasing  his  comforts,  by  allowing  him  to 
devote  his  undivided  attention  to  his  own  industry  or  call- 
ing, and  by  furnishing  him  with  economies  in  the  conduct  of 
his  business.  Some  of  them  will  quarter  themselves  as  a 
right  or  by  force  on  his  labors  and  their  produce,  and  will 
color  their  usurpation  by  alleging  that  he  owes  allegiance 
or  duty."* 

These  claims,  our  author  tells  us,  are  most  insolent 
and  incessant  when  society  is  barbarous,  but  there  is  some 
doubt  about  this  latter  conclusion.  That  those  who  lived 
by  the  exertion  of  others  were  more  insolent  in  asserting 
their  right  to  do  so  in  barbarous  times  is  true;  that  they 
who  now  set  up  a  similar  claim  are  less  insistent  than  their 
predecessors,  who  exerted  force  to  compel  the  producer 
to  yield  the  major  part  of  his  products  to  them  for  the 
gratification  of  their  taste  for  luxury,  is  false. 

In  another  place,  referring  to  the  iniquitous  system  of 
entail  still  maintained  in  Great  Britain,  Rogers  says:  "It 
perpetuated  the  poverty  of  the  younger  son  and  the  system 
of  quartering  him  on  the  public  purse.  It  was  the  origin 
of  the  principle  of  vested  interests,  perhaps  the  most  anti- 
social and  dangerous  doctrine  which  has  pretended  to  justify 
the  robbery  of  all  labor,  and  will  justify  the  antagonism 
of  all  labor  to  privilege."  f 

It  is  this  principle  of  vested  interests  which  Rogers  de- 
nounces in  a  fashion  that  might  convey  the  impression  that 
he  was  a  dangerous  agitator  if  we  did  not  know  that  he  was 
one  of  the  most  conservative  of  modern  writers  that  gives 
to  the  non-producer  the  tremendous  advantage  he  enjoys. 

♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  159. 
flbid,  p.  295. 


4IO         PROTECTION   AND   PROGRESS 

Under  its  cloak  he  conceals  the  iniquitous  methods  by  which 
for  services  performed  centuries  ago  he  still  exacts  toll. 
Vested  interests  is  the  powerful  weapon  with  which  the 
modern  capitalist  asserts  his  perpetual  right  to  enjoyment 
of  the  fruits  of  robbery. 

The  learned  Professor  Rogers  tells  us  of  the  infamous 
methods  by  which  the  landed  class  in  England  succeeded  in 
diverting  from  the  common  use  the  soil  of  the  Kingdom,  but 
he  would  not  have  the  descendants  of  the  robbers  disturbed 
because  they  have  vested  rights.  The  brilliant  Macaulay 
describes  the  atrocities  of  John  Churchill,  his  betrayal  of 
James,  his  acceptance  of  bribes  from  the  French  King,  the 
terms  on  which  his  services  were  bought  by  William,  the 
whole  being  an  unbroken  record  of  treachery  unmatched 
in  the  annals  of  man,  yet  the  Marlboroughs  are  permitted 
to  enjoy  the  fruits  of  these  rascalities  through  centuries, 
and  will  continue  to  do  so  as  long  as  vested  interests  are 
considered  more  sacred  than  human  rights.  The  very 
writer  who  tells  us  that  the  maintenance  of  the  principle 
justifies  the  antagonism  of  all  labor  to  privilege  has  been 
the  foremost  champion  of  this  system  which  permits  one 
part  of  the  community  to  quarter  itself  on  the  other  and 
live  without  toil  at  the  expense  of  the  producer. 

In  their  labored  eulogies  of  the  beauties  of  competition 
in  its  extreme  form  Rogers  and  other  free  traders  have  felt 
it  necessary  to  preach  the  doctrine  of  the  sacredness  of  cap- 
ital and  have  constructed  ingenious  defenses  of  a  system 
which,  when  allowed  to  operate  unrestrainedly,  inevitably 
tends  to  the  impoverishment  of  the  producing  masses.  In 
order  to  create  respect  and  reverence  for  this  power  and  to 
disarm  opposition  to  its  exercise  books  have  been  written 
to  produce  the  impression  that  capital  is  the  fruit  of  ab- 
stention and  therefore  deserves  all  the  rewards  it  receives. 
That  some  capital  is  created  by  the  practice  of  self-denial 
no  one  will  dispute.  Instances  of  the  kind  are  common 
enough  to  make  this  plausible  half  truth  seem  entirely  true, 


CONSUMERS  4" 

but  a  patient  inquiry  into  the  methods  by  which  fortunes 
are  made  will  reveal  the  fact  that  where  one  dollar  is  set 
aside  which  represents  a  genuine  deprivation  or  a  real  act  of 
self-denial  hundreds  and  thousands  are  accumulated  by 
fraudulent  practices  and  by  the  process  of  adding  to  the 
acquisitions  of  those  who  find  it  difficult  to  expend  the  whole 
of  their  incomes,  and  therefore  save  them  automatically. 

As  instances  of  accumulations  of  capital  created  fraud- 
ulently, the  major  part  of  the  great  railroad  fortunes  of 
this  and  other  countries  may  be  cited.  How  much  self- 
denial  have  the  Vanderbilts  practiced  to  add  to  their  mil- 
lions? What  is  the  degree  of  abstention  displayed  by  the 
merchant  prince  whose  scale  of  domestic  expenditure  rivals 
that  of  the  class  from  which  he  derives  his  nickname? 
Have  the  Astors  made  such  sacrifices  that  they  really  de- 
serve to  be  rewarded  with  incomes  which  would  maintain 
in  comfort  a  hundred  thousand  people?  Is  the  Duke  of 
Westminster  simply  enjoying  a  deserved  reward  when  gath- 
ering millions  annually  from  the  tenants  of  his  estates  in 
the  city  of  London?  The  income  tax  returns  of  Great 
Britain  in  1868  showed  that  "one  per  cent,  of  the  population 
of  the  United  Kingdom  received  one-quarter  of  the  na- 
tion's income,  while  about  10  per  cent,  received  only  as 
much  as  the  remaining  90  per  cent."*  Will  any  one  venture 
to  assert  that  this  condition  was  brought  about  by  the  in- 
dustry and  frugality  of  the  people  thus  monopolizing  the 
greater  part  of  the  products  of  the  labor  of  a  nation  of 
thirty-nine  millions,  or  by  the  thrift  and  self-denial  of  their 
ancestors  ? 

It  may  be  asserted  without  fear  of  successful  contradic- 
tion that  only  an  infinitesimal  part  of  the  vast  aggregates 
of  wealth  and  credits  which  bring  returns  to  their  owners 
is  entitled  to  be  treated  with  the  consideration  which  most 
economists  urge  should  be  shown  to  capital  because  it  rep- 

♦Baxter,  Taxation  of  the  United  Kingdom,  p.  64. 


412         PROTECTION   AND   PROGRESS 

resents  a  self-denial  which  enables  the  world  to  continue 
the  process  of  production.  The  great  mass  of  accumula- 
tions, whether  they  are  in  the  form  of  real  wealth  or 
potential  credits,  which,  under  the  system  we  are  treating 
of,  command  labor  and  its  fruits  as  readily  as  wealth  itself, 
is  merely  the  sum  total  of  extortions,  excessive  profits  and 
the  result  of  the  savings  of  persons  whose  wants  are  always 
filled  to  the  point  of  satiety. 

This  being  the  case,  it  is  worse  than  a  blunder  to  arg^ie 
that  all  consumers  are  on  the  same  plane  and  that  reduc- 
tions in  the  prices  of  articles  inure  to  the  general  benefit, 
because  it  ignores  the  patent  fact  that  all  the  potential 
capital  of  the  world  is  affected  by  the  reductions  and  that 
its  owners  profit  more  by  the  appreciation  of  the  value  of 
its  earnings  than  they  lose  by  the  fall  in  the  rate  of  interest 
which  in  some  cases  accompanies  a  diminution  of  returns 
to  producers. 

We  are  sometimes  reminded  that  a  John  Jacob  Astor,  a 
William  Vanderbilt  or  a  Duke  of  Westminster  can  only  con- 
sume so  much  flour  and  meat,  and  we  are  asked  to  believe 
that  because  this  is  true  the  owners  of  vast  fortunes  receive 
no  more  benefit  from  the  fall  of  prices  than  other  consum- 
ers. But  the  fatal  flaw  in  this  argument  is  the  fact  that  a 
diminishing  cost  of  production  constantly  tends  to  increase 
the  wealth  of  those  who  already  possess  more  than  enough 
to  satisfy  their  wants,  and  concurrently  curtails  the  oppor- 
tunity of  those  who  are  compelled  to  toil  in  order  to  obtain 
enough  to  keep  body  and  soul  together. 

In  an  article  on  "The  Economic  Cause  of  Unemploy- 
ment" by  J.  A.  Hobson,  published  in  the  Contemporary 
Review  of  May,  1895,  the  writer  discusses  at  some  length 
the  subject  of  automatic  saving,  which  he  claims  "upsets 
the  balance  between  consumption  and  producing  power." 
The  eflFect,  he  declares,  is  overcapitalization,  which  results 
in  the  displacing  of  capital  already  in  existence  and  its  prac- 
tical destruction.    He  describes  the  process  in  this  manner: 


CONSUMERS  413 

"A  large  part  of  the  power  to  consume  is  in  the  hands 
of  those  who  have  not  the  desire  to  consume.  What,  then, 
do  these  men  desire  to  do?  They  desire  to  save.  But 
saving,  if  we  look  behind  the  operation  of  putting  money 
in  a  bank,  means  paying  labor  to  set  up  plants,  machinery 
and  other  material  forms  of  capital.  But  does  not  this  give 
as  much  employment  to  capital  and  labor  as  the  same  power 
used  to  demand  consumables?  Quite  true,  the  'saving' 
which  employs  labor  to  build  a  factory  and  stock  it  with 
machinery  will  cause  as  much  employment  as  the  same 
amount  of  spending,  though  not  more  employment,  as  J.  S. 
Mill  sought  to  maintain.  Moreover,  in  the  one  case  when 
the  money  is  'spent'  there  is  nothing  to  show  for  it ;  in  the 
other  case  there  is  a  factory  and  machinery. 

"But  when  our  theoretic  friend  goes  on  to  assume  that 
the  factory  can  be  profitably  worked,  and  that  the  work 
it  affords  signifies  a  net  increase  of  both  labor  and  capital, 
he  jumps  to  a  conclusion  which  is  quite  unwarranted.  It 
can  only  be  profitably  worked  on  one  of  two  supposi- 
tions. It  may  by  successful  competition  obtain  the  orders 
which  would  have  gone  to  another  factory,  ousting  from 
employment  the  capital  and  labor  there  engaged.  In  this 
case  it  is  clear  no  net  increase  of  employment  has  taken 
place.  An  individual  has  made  good  his  'saving,'  but  has 
done  so  by  negativing  the  previous  saving  of  some  one  else ; 
the  productive  power  of  the  community  is  increased,  but 
no  more  actual  production  than  before  is  brought  about. 
The  other  supposition  is  that  the  demand  for  the  class  of 
commodities  which  the  factory  makes  will  be  greater  in 
the  future,  and  that  therefore  more  capital  and  labor  can 
be  employed  in  the  trade. 

"So  far  as  this  supposition  in  valuable,  the  'saving'  is 
socially  useful,  and,  indeed,  necessary;  but  it  should  be 
plainly  recognized  that  the  dependence  of  capital  and  labor 
for  employment  on  a  rising  standard  of  consumption  places 
an  absolute  limit  upon  socially  useful  saving.    An  individual 


414         PROTECTION   AND   PROGRliSS 

may  save  atiy  proportion  of  his  income,  provided  lie  can 
induce  others  to  spend  their  income  and  give  him  Hens  upon 
their  present  property  or  future  production.  But  the  pro- 
portion of  a  community's  income  which  it  can  save  and 
usefully  store  up  in  plant,  machinery  and  other  forms  of 
capital  is  strictly  limited  by  the  rate  of  current  or  pros- 
pective consumption.  Only  a  very  small  proportion  of 
'saving'  can  profitably  be  invested  in  forms  of  capital  that 
fructify  in  the  distant  future;  the  currently  or  immediately 
prospective  rate  of  consumption  determine  pretty  closely 
the  proportion  of  current  income  which  can  be  usefully 
saved. 

"Our  saving  class  are  therefore  not  necessarily  causing 
an  increase  of  'employment'  by  paying  workers  to  put  up 
more  factories  instead  of  using  their  moneys  to  demand 
consumables.  So  long  as  the  'saving'  is  actually  in  progress 
— i.  e.,  so  long  as  the  factory  and  machinery  are  being 
made — the  net  employment  of  the  community  is  just  as 
large  as  if  the  money  were  spent  to  demand  commodities ; 
more  labor  is  engaged  in  making  factories,  less  in  working 
them.  But  after  the  new  factories  are  made  they  can  only 
be  worked  on  condition  that  there  is  an  increase  of  con- 
sumption correspondent  to  the  increase  of  producing 
power — i.  e.,  on  condition  that  a  sufficient  number  of  per- 
sons are  actuated  by  motives  different  from  those  which 
animated  the  'saving'  class,  and  will  consent  to  give  validity 
to  their  saving  by  'spending'  on  commodities  an  increased 
proportion  of  their  incomes.  Where  no  such  expectation  is 
realized  an  attempt  to  operate  the  new  factories  does  not 
give  any  net  increase  of  employment ;  it  only  gluts  the  mar- 
kets, drives  down  prices,  closes  the  weaker  factories,  im- 
parts irregularity  to  work  and  generally  disorganizes  trade. 

"The  frequent  recurrence  of  these  phenomena  in  most 
departments  of  trade  is  the  strongest  presumptive  evidence 
of  an  attempt  of  the  capitalist  classes  to  place  and  operate 
more  capital  than  is  required  to  maintain  the  current  flow 


CONSUMERS  415 

of  consumption.  An  individual  may  be  a  rich  miser;  a 
community  cannot.  To  the  average  reasonable  man  it  is  a 
self-evident  fact  that  a  community  cannot  advantageously 
save  more  than  a  certain  proportion  of  its  annual  income 
unless  for  the  express  purpose  of  consuming  a  larger  pro- 
portion at  some  distant  date.  The  economist  is,  however, 
too  often  blinded  by  the  acceptance  of  a  strange  sophism 
to  the  effect  that  'saving'  implies  no  reduction  in  current 
consumption,  a  wild  notion  which  is  due  to  a  failure  to 
analyze  the  process  of  saving.     *     *     * 

"This  simple  truth  that  real  saving  implies  diminished 
consumption  is  the  kernel  of  a  true  understanding  of  the 
unemployed  question.  If  we  find  labor  and  capital  unem- 
ployed in  our  manufactures,  if  we  find  them  wastefully  em- 
ployed in  our  distributing  industry,  it  can  only  mean  an 
undue  diminution  of  consumption,  or,  in  other  words,  an 
attempt  to  establish  as  'savings'  a  larger  number  of  forms  of 
capital  than  are  economically  required  to  assist  in  main- 
taining current  or  prospective  consumption."* 

The  writer  of  the  above  explains  that  he  does  not  plead 
for  conservatism  in  industry  or  for  the  rejection  of  new 
and  improved  forms  of  machinery  and  method,  but  that  he 
merely  protests  "against  the  waste  of  the  wrecking  policy 
in  modern  commerce,  by  which  old  businesses  are  ruined  by 
the  speculative  operation  of  new  competitors  who  bring 
with  them  no  intrinsic  superiority  of  production  sufficient 
to  compensate  the  destruction  of  capital  value  and  the  dis- 
turbance of  employment  which  they  cause." 

His  remedy  for  the  evil  which  he  describes  at  such 
length,  and  the  existence  of  which  will  not  be  seriously 
questioned  by  any  competent  writer  or  thinker,  is  progres- 
sive taxation.  Such  a  suggestion  naturally  la}s  him  open 
to  the  charge  of  socialistic  tendencies,  but  that  is  something 

♦Hobson,  Economic  Causes  of  Unemployment,  Contemporary,  May, 
1895. 


4i6         PROTECTION   AND   PROGRESS 

to  which  the  most  extreme  advocates  of  laisse::  faire  are  also 
obnoxious.  The  writings  of  J.  S.  Mill,  Herbert  Spencer, 
J.  Thorold  Rogers  and  other  economists  of  standing  whose 
names  will  suggest  themselves  to  all  students  of  economics 
abound  in  matter  which  may  easily  lead  to  the  inference 
that  they  favor  state  regulation,  although  they  advocate 
unrestrained  competition. 

It  is  quite  evident  that  the  theories  of  political  economists 
will  never  be  received  with  respect  by  the  masses  if  they 
shrink  from  honestly  stating  their  conclusions  either 
through  fear  of  adverse  criticism  or  because  they  cannot 
determine  what  the  consequences  might  be  if  other  methods 
than  those  now  in  vogue  were  resorted  to  by  those  who 
control  the  destinies  of  nations.  There  is  no  doubt  that 
the  latter  consideration  is  the  restraining  one  with  mo.>t 
writers.  I  am  disposed  to  admit  its  influence  and  to  confess 
that  it  may  be  wiser  to  bear  the  ills  we  have  than  to  fly  to 
those  we  know  not  of,  but  I  do  not  believe  that  any  doubts 
of  this  kind  which  I  may  feel  should  restrain  me  from  stat- 
ing facts,  and  am  profoundly  convinced  that  it  would  be  in 
the  nature  of  a  crime  to  attempt  to  demonstrate  that  a 
system  which  is  undoubtedly  working  illy  is  the  best  one 
attainable. 

That  this  is  the  conscious  or  unconscious  aim  of  all 
adherents  of  laisses  faire  is  obvious.  Their  effort  to  prove 
that  the  producer  and  the  non-producer  are  affected  alike 
by  the  phenomena  they  discuss  is  a  confession  of  weakness, 
for  attempts  to  place  all  consumers  on  the  same  plane  in- 
evitably disclose  that  the  assumed  resemblance  does  not 
exist,  and  that  in  reality  the  interests  of  the  two  classes 
are  diametrically  opposed.  The  sooner  this  is  recognized 
the  better  for  mankind,  for  while  the  world  is  taught  to 
believe  that  all  consumers  are  equally  benefited  by  the  oper- 
ations of  unrestrained  competition  no  serious  disposition 
to  correct  the  excesses  of  the  capitalistic  system  will  arise. 

Until  economists  cease  to  teach  that  the  producer  who 


CONSUMERS  417 

is  compelled  to  work  at  a  loss  is  a  gainer  by  the  sacrifices 
he  makes,  because  other  producers  are  also  forced  to  do 
without  profit,  there  will  be  a  tacit  consent  to  the  practice  of 
all  kinds  of  villainy  which  masquerade  under  the  name  of 
trade  operations.  There  can  never  be  a  healthy  readjust- 
ment of  the  relations  between  employer  and  employed  so 
long  as  the  idea  prevails  that  no  evil  results  can  flow  from 
overproduction  resulting  from  the  attempt  to  employ  fresh 
capital  when  that  already  engaged  more  than  suffices  to 
meet  requirements. 

The  writer  appreciates  the  difficulties  that  suggest  them- 
selves when  the  question  is  asked :  What  can  be  done  to 
prevent  overproduction?  At  once  a  host  of  other  questions 
arise  and  demand  an  answer.  If  an  attempt  is  made  to 
limit  production  what  assurance  have  we  that  it  will  not 
result  in  depriving  us  of  the  benefits  of  inventiveness  ?  Are 
we  to  do  away  with  automatic  machinery  because  it  pro- 
duces so  rapidly  that  its  output  is  in  excess  of  the  effective 
demand?  Must  we  maintain  the  plants  of  machinery  al- 
ready in  existence  if  ingenious  inventors  devise  new  ma- 
chines which  do  the  work  more  effectively?  Should  we 
forbid  the  construction  of  rival  railroads  if  there  is  ground 
for  the  belief  that  those  already  in  existence  are  capable  of 
doing  the  work  required  of  them?  Ought  we  to  prohibit 
forestalling  and  close  up  all  the  exchanges  that  deal  in 
"futures"?  Ought  we  to  arrest  the  growing  tendency  to 
eliminate  the  middleman  which  the  creation  of  great  de- 
partment stores  exhibits?  Shall  we  deliberately  say  to 
those  who  propose  to  effect  great  economies  in  production 
by  manufacturing  on  an  enormous  scale  that  they  must  not 
do  so,  because  the  result  of  their  efforts,  if  successful,  will 
be  to  drive  out  of  business  a  large  number  of  small  pro- 
ducers ? 

These  and  a  score  of  other  equally  pertinent  and  diffi- 
cult questions  demand  an  answer.  The  socialists  prefer  to 
find   nothing  troublesome    in     such   queries.      They   have 


4i8         PROTECTION   AND   PROGRESS 

sweepingly  answered  all  of  them  in  the  affirmative.  They 
declare  that  competition  is  necessarily  subject  to  the  abuses 
complained  of  and  refuse  to  recognize  that  it  can  be  regu- 
lated advantageously.  The  advocates  of  laissez  [aire,  on 
the  other  hand,  unvveariedly  devote  themselves  to  attempts 
to  square  their  theory  that  the  effects  of  unrestrained  com- 
petition must  necessarily  be  beneficial  v^ith  the  practical 
working  of  the  existing  system,  which  is  attended  with  so 
many  drawbacks  that  conservative  writers  of  their  own 
school  contemplating  them  speak  of  the  possibilities  of  a 
social  revolution. 

Between  such  extreme  views  a  middle  ground  ought  to 
be  found.  It  cannot  be  possible  that  competition  has  no 
merits.  Even  the  socialists  who  sweepingly  condemn  the 
abuses  to  which  the  system  has  been  subjected  are  com- 
pelled, whenever  they  attempt  to  be  constructive,  to  suggest 
some  method  to  stimulate  exertion  and  prevent  inertia.  If 
the  men  wh'o  are  devoting  themselves  to  the  work  of  invent- 
ing fantastic  plans  to  regenerate  society  would  employ  their 
abilities  in  teaching  the  people  that  in  a  country  with  demo- 
cratic institutions  most  of  the  abuses  of  which  they  com- 
plain are  capable  of  being  remedied  by  ordinary  processes, 
instead  of  preaching  a  crusade  against  all  existing  social 
conditions,  they  might  accomplish  their  purpose  without 
plunging  the  vvorld  into  turmoil. 

It  will  be  admitted,  however,  that  very  little  progress 
in  the  direction  of  a  better  understanding  of  these  matters 
can  be  reached  so  long  as  the  doctors  differ  so  radically 
respecting  the  cause  of  the  trouble  and  the  remedies  to 
be  applied.  We  are  told  by  one  set  of  would-be  reformers — 
the  followers  of  Kenry  George — that  all  the  evils  of  modern 
society  are  due  to  the  private  ownership  of  land,  and  that 
the  remedy  is  the  virtual  extinction  of  all  private  titles  to 
land  by  a  process  of  taxation.  It  will  be  conceded  by  all 
who  have  given  attention  to  the  subject  that  land  monopoly 
is  an  evil,  but  there  are  many  who  are  ready  to  admit  this 


CONSUMERS  419 

much  who  contend  that  the  holding  of  land  in  common 
would  prove  an  insuperable  barrier  to  progress,  and  that 
no  tenure,  no  matter  how  secure,  would  serve  to  keep  the 
world's  agricultural  land  from  wearing  out,  or  bring  in- 
ferior soil  under  cultivation,  but  that  which  guarantees  to 
man  a  title  in  perpetuity. 

That  there  is  some  foundation  for  this  latter  assump- 
tion will  be  readily  inferred  from  a  consideration  of  the 
experience  of  the  ancient  Egyptians,  who,  although  nom- 
inal owners  of  the  land,  were  subjected  to  such  conditions 
that  the  state  practically  controlled  the  output.  The  result 
was  the  "full  belly"  which  has  been  previously  referred 
to,  because  the  state  recognized  its  obligation  to  the  working 
masses  and  took  care  to  guard  them  against  the  forestaller. 
But  how  far  the  system  was  responsible  for  that  curious 
attitude  of  opposition  to  foreigners  which  took  the  extreme 
form  of  refusing  to  trade  with  them  it  would  be  difficult 
to  state. 

We  are  told  that  "Egyptian  corn  was  not  sent  out  of 
the  country  to  buy  foreign  luxuries  or  articles  of  ostenta- 
tion for  which  the  demand  could  be  indefinitely  increased 
so  as  to  swallow  up  the  accumulations  of  the  rich ;  neither 
was  th^  demand  for  laborers  limited  by  the  power  of  the 
capitalist  to  drive  a  remunerative  trade  in  the  produce  of 
their  work.  Practically  the  whole  of  the  hoarded  food  was 
spent  in  maintaining  the  'eater  of  rations,'  and  as  in  no 
case  did  they  expect  or  receive  more  than  a  maintenance 
they  submitted  without  any  sense  of  injury  to  the  regime 
which  caused  the  spare  labor  of  the  community  (i.  e.,  their 
own)  to  be  spent  in  erecting  royal  monuments,  private 
tombs,  temples  of  the  gods,  and  in  maintaining  officers. 
priests  and  sacred  animals,  instead  of  raising  the  general 
standard  of  luxury."* 

Henry  George  and  other  extreme  opponents  of  the  pri- 

*Simcox,   Primitive   Civilizations.   Vol.  I.  p.   70. 


420  TROTECTION  AND  PROGRESS 

vatc  ownership  of  land  have  strongly  inveighed  against  tlie 
protection  policy  on  the  ground  that  it  would  have  a  tend- 
ency to  rear  a  barrier  about  the  country  resorting  to  it 
which  would  retard  its  progress,  but  there  is  grave  reason 
for  believing  that  the  adoption  of  the  plan  of  taxation  which 
he  advocates  would  certainly  accomplish  this  undesirable 
result.  It  is  hardly  necessary  to  controvert  George's  error 
by  reproducing  the  evidence  which  conclusively  establishes 
the  error  of  free  trade  contention  that  protection  results 
in  cutting  off  intercourse  between  nations.  The  tremen- 
dous increase  of  the  external  trade  of  such  protective  na- 
tions as  the  United  States,  Germany  and  France  shows 
that  the  policy  of  encouraging  home  industry  has  no  such 
effect,  but,  on  the  contrary,  by  greatly  enlarging  the  re- 
sources of  the  protected  people  their  surplus  of  wealth  is 
increased  and  they  have  more  to  offer  in  exchange  for 
articles  which  they  cannot  themselves  produce.  This  has 
certainly  been  the  experience  of  the  United  States  and  Ger- 
many, and  it  is  likely  that  it  will  be  repeated  by  Russia, 
which  country,  as  has  been  shown,  under  the  influence  of 
laws  calculated  to  promote  domestic  manufactures  and  in- 
dustry of  all  kinds,  is  making  rapid  advances  and  concur- 
rently developing  a  great  external  trade. 

But  we  may  well  ask  what  might  be  the  case  if  the 
mooted  proposition  to  nationalize  the  land  should  be  carried 
into  execution  in  this  country?  We  are  aware  that  Henry 
George's  disciples  deny  that  the  effect  of  the  single  tax 
would  do  more  than  cause  the  transference  of  the  unearned 
increment  of  land  to  the  state,  but  it  seems  logical  to  con- 
clude that  any  system  which  could  be  devised  to  take  the 
place  of  private  ownership  would  involve  the  corrollary  of 
state  aid  to  those  who  were  unable  to  secure  a  sufficient 
quantity  of  land  to  maintain  them,  or  who  failed  to  earn  a 
livelihood  by  the  practice  of  other  than  agricultural  call- 
ings. 

It  is  contended  by  the  advocates  of  the  single  tax  that 


CONSUMERS  421 

the  inevitable  result  of  the  destruction  of  private  ownership 
would  mend  affairs  so  thoroughly  that  neither  of  the  con- 
tingencies mentioned  could  occur  and  that  there  would 
always  be  land  in  plenty  for  all  who  desired  it,  and  that 
those  who  did  not  desire  land  would  have  no  difficulty  in 
finding  work  suited  to  their  hands  and  capacity  which  would 
earn  their  subsistence  and  maintain  them  in  comfort.  But 
there  is  reason  to  distrust  the  soundness  of  this  view.  If 
it  were  true  that  the  ability  to  acquire  land  with  ease  were 
a  perfect  barrier  against  penury  and  want  we  would  not  be 
confronted  with  scores  of  instances  in  the  history  of  our 
own  country  of  the  people  being  plunged  in  poverty  and 
wretchedness  when  millions  of  unused  acres  were  freely 
accessible  to  them.  It  is  a  delusion  shared  alike  by  the  fol- 
lowers of  Henry  George  and  the  free  trader  that  material 
prosperity  is  a  necessary  resultant  of  the  ability  of  the  peo- 
ple to  easily  acquire  unoccupied  land.  But  the  severest  busi- 
ness depressions  in  the  United  States,  with  their  accompa- 
nying soup  houses  and  increased  pauperism,  were 
experienced  during  periods  when  the  best  of  land  could 
be  had  for  the  taking.  There  is  no  doubt  that  without  land, 
or  the  ability  to  command  its  products,  there  can  be  no 
material  prosperity,  but  it  is  equally  certain  that  free  land 
may  exist  in  abundance,  as  it  still  does  in  many  countries, 
without  giving  an  impulse  to  progress. 

That  man  could  not  exist  without  land  is  so  apparent 
that  it  seems  strange  that  writers  should  take  the  trouble 
to  adduce  arguments  to  support  the  contention  that  there 
could  be  no  progress  without  it.  It  does  not  follow,  how- 
ever, that  because  there  is  free  land  in  abundance  there 
must  be  prosperity;  nor  is  there  any  foundation  for  the 
assumption  that  free  access  to  land  would  bring  about  a 
better  condition  of  affairs  than  we  find  existing  in  progres- 
sive countries  to-day  unless  some  means  should  be  adopted 
to  prevent  the  absorption  of  the  unearned  increment  from 
other  sources  than  land. 


422         PROTECTION  AND  PROGRESS 

If  we  turn  to  the  annals  of  a  country  where  the  monopo- 
lization of  the  soil  by  a  few  individuals  has  been  carried 
to  a  greater  extent  than  in  any  other  we  find  that  during 
the  period  when  much  of  the  land  was  common  there  was 
comparatively  little  progress.  In  Rogers'  justly  esteemed 
review  of  English  work  and  wages  during  six  centuries  we 
find  abundant  proof  that  England  was  at  a  standstill  when 
the  opportunity  to  procure  land  was  easiest.  It  is  true 
that  the  author  was  convinced  that  "the  grinding,  hopeless 
poverty  under  which  existence  may  be  just  continued,  but 
when  nothing  is  won  beyond  bare  existence,  did  not  char- 
acterize or  even  belong  to  (English)  mediaeval  life,"'''  but 
he  is  compelled  to  make  plain  the  fact  that  the  exemption 
to  which  he  refers  was  due  in  large  part  to  an  agency  closely 
resembling  that  of  the  state.  The  religious  institutions, 
whose  absorption  of  the  land  during  the  period  in  question 
was  its  most  characteristic  feature,  no  matter  what  abuses 
may  have  accompanied  their  administration,  systematically 
extended  a  helping  hand  to  the  poor.  As  in  ancient  Egypt, 
they  recognized  the  obligation  of  the  land  owner  to  inter- 
vene between  the  people  and  starvation,  and  the  records  in- 
dicate that  they  were  frequently  called  upon  to  exercise  the 
function  of  ration  provider,  although  most  of  the  time  the 
price  of  provisions,  as  shown  by  contemporary  documents 
still  extant,  was  so  low  it  seems  incredible  that  want  could 
have  existed  unless  as  the  result  of  extreme  improvidence. 

That  improvidence  was  induced  by  the  abundance  of 
free  land  during  the  Middle  Ages  there  seems  no  doubt. 
Rogers  tells  us  that  "at  an  early  period  it  was  recognized 
that  land  held  in  severalty  was  worth  25  per  cent,  more 
than  land  of  equal  quality  held  in  the  lammas  field ;  and 
that  when  such  distributions  and  assignments  were  made 
the  land  was  found  to  be  far  more  serviceable." t    The  only 

*  Rogers,  Six  Centuries  of  Work  and  Wages,  p.  415. 
■j-Ibid,  p.  444. 


CONSUMERS  423 

inference  that  can  be  fairly  drawn  from  this  is  that  the 
individual  cultivator  of  lammas  land,  no  matter  how  care- 
fully guarded  his  rights  may  have  been,  could  not  be  in- 
duced to  give  it  the  care  calculated  to  produce  the  same 
results  that  he  would  have  made  it  yield  had  he  owned  it 
absolutely.  The  fact  that  after  lammas  tide  the  land  became 
common  for  pasturage  operated  as  a  bar  to  improvement. 

This  probably  explains  the  backwardness  of  English 
agriculture  until  the  seventeenth  century,  when  the  Holland- 
ers taught  the  British  farmer  how  to  use  his  land  and  obtain 
adequate  results  from  it.  Rogers  says :  "We  owe  the  im- 
provements in  English  agriculture  to  Holland.  From  that 
country  we  borrowed  at  the  beginning  of  the  seventeenth 
century  the  cultivation  of  winter  roots,  and  at  that  of  the 
eighteenth  century  the  artificial  grasses.  The  Dutch  had 
practiced  agriculture  with  the  patient  and  minute  industry 
of  market  gardeners.  They  had  tried  successfully  to  culti- 
vate everything  to  the  uttermost  which  could  be  used  for 
human  food,  or  could  give  innocent  gratification  to  a  refined 
taste.  They  taught  agriculture  and  they  taught  gardening. 
They  were  the  first  people  to  surround  their  homesteads 
with  flower  beds,  with  groves,  with  trim  parterres,  with  the 
finest  turf,  to  improve  fruit  trees,  to  seek  out  and  perfect 
edible  roots  and  herbs,  at  once  for  man  and  cattle.  We  owe 
to  the  Dutch  that  scurvy  and  leprosy  have  been  banished 
from  England,  that  continuous  crops  have  taken  the  place 
of  barren  fallows,  that  the  true  relation  of  crops  has  been 
discovered  and  perfected,  that  the  population  of  these  islands 
has  been  increased  and  that  the  cattle  and  sheep  are  ten 
times  what  they  were  in  number  and  three  times  what  they 
were  in  size  and  quality."* 

When  we  inquire  why  the  Dutch  happened  to  be  so 
far  in  advance  of  the  English  we  learn  several  important 
facts,  all  of  which  greatly  militate  against  the  theory  that 


♦Rogers.    Six   Centuries   of  Work   and   Wages,   p    453. 


424         PROTECTION  AND  PROGRESS 

common  ownership  of  land  is  either  advisable  or  necessary 
to  secure  good  results  for  mankind.  Foremost  we  find  that 
the  Roman  idea  of  property  right  in  land  existed  in  Hol- 
land when  the  British  isles  were  inhabited  by  a  people  little 
better  than  savages.  "In  Holland,"  says  an  American 
writer,  "all  property,  both  real  and  personal,  of  persons 
dying  intestate,  except  land  held  by  feudal  tenure,  was 
equally  divided  among  the  children  by  an  act  passed  by  the 
states  in  1580.  This  act  also  contained  a  further  enlight- 
ened provision,  copied  from  Rome  and  since  adopted  in 
other  continental  countries,  which  prohibited  parents  from 
disinheriting  their  children  except  for  certain  specified  of- 
fenses. Under  this  system  it  became  customary  for  parents 
to  divide  their  property  by  will  equally  among  their  chil- 
dren, just  as  the  custom  of  leaving  all  the  property  to  th'? 
eldest  son  grew  up  under  the  laws  of  England."* 

Here  we  have  one  secret  of  Dutch  agricultural  progress : 
The  complete  recognition  of  land  as  property  having  essen- 
tially the  same  characteristics  as  other  property,  and  when 
we  investigate  further  we  discover  that  every  effort  was 
made  to  cause  the  transference  of  land  to  be  made  as  easy 
as  that  of  its  products.  The  machinery  of  transfer  was 
simplified  and  alienations  of  real  estate  were  facilitated.  A 
comprehensive  system  of  recording  was  adopted  which  be- 
came general  throughout  the  Netherlands  and  which  was 
afterwards  extended  by  the  States,  or  legislature  of  Holland, 
so  as  to  cover  all  instruments  affecting  land,  requiring  them 
to  be  registered  in  order  to  give  them  validity. 

Although  the  British  were  quick  to  imitate  the  Hol- 
landers in  other  particulars  they  refused  to  borrow  this 
important  device,  because  the  land  owners,  the  aristocratic 
classes,  plainly  foresaw  that  to  make  the  alienation  of  land 
easy  might  prove  destructive  to  their  importance  as  landed 

♦Campbell,  The  Puritan  in  Holland,  England  and  America,  Vol.  II, 
p.  452. 


CONSUMERS  425 

proprietors.  Hence  the  possession  of  land  came  to  be  re- 
garded by  Englishmen  as  a  badge  of  consequence  and  the 
aim  was  to  secure  as  much  of  it  as  possible,  not  alone  for  the 
purpose  of  increasing  the  revenues  of  the  proprietors,  but 
to  enhance  their  social  or  political  condition.  The  conse- 
quence was  that  ignorance  and  stupidity  prevailed  in  agri- 
cultural matters  in  England,  while  intellect  and  ingenuity 
were  developing  the  art  of  farming  in  Holland  to  such  an 
extent  that  the  practices  of  the  Dutch  were  being  imitated 
in  all  countries  where  enough  enterprise  existed  to  prompt 
attempts  at  improvement. 

Had  the  system  which  was  perfected  in  Holland  by 
Charles  V.  prevailed  in  England  it  would  not  have  been 
necessary  for  Rogers  to  have  made  the  acknowledgment  of 
British  indebtedness  to  the  Dutch  noted  above.  It  is  im- 
possible to  believe  that  the  development  of  the  manufactur- 
ing industry  which  began  as  early  as  the  reign  of  Edward 
in.  would  not  have  stimulated  agricultural  improvement 
if  the  laws  of  the  country  had  assisted  small  owners  to  se- 
cure tracts  of  land  without  difficulty.  The  absence  of  such 
facilities  was  fatal  to  progress.  There  was  no  inducement 
for  small  occupiers  to  improve  the  lammas  land,  and  the 
large  proprietors,  who  held  under  a  more  secure  tenure, 
were  too  much  absorbed  in  working  out  their  schemes  of 
political  and  social  advancement  to  think  of  such  sordid 
matters  as  the  creation  of  new  foods. 

When  English  agriculture  began  to  make  progress  it 
became  the  fad  for  gentlemen  proprietors  to  improve  their 
estates,  and  no  doubt  their  efforts,  although  in  many  in- 
stances misdirected  and  unprofitable,  contributed  largely 
to  the  advances  which  marked  British  farming  during  the 
seventeenth  century.  But  this  progress,  as  noted  by  Rogers, 
"was  accompanied  by  a  marked  depression  in  the  laborer's 
condition,"  and  he  attributes  it,  by  indirection  at  least,  to 
the  fact  that  there  was  too  much  land  in  cultivation  and  too 
little  capital   to  cultivate   it   with.      This   latter   drawback 


426         PROTECTION   AND   PROGRESS 

reduced  the  tenant  farmer  to  the  necessity  of  squeezing  his 
employes  in  order  to  make  ends  meet;  the  main  trouble, 
however,  was  due  to  the  fact  that  the  landlord  demanded 
more  than  the  lion's  share  and  did  all  he  could  to  repress 
improvement  by  his  extortions. 

In  spite  of  this  tendency  to  squeeze  it  was  noted  that 
the  abandonment  of  the  communal  system  tended  to  im- 
provement. A  writer  quoted  by  Rogers  says  "an  acre  of 
enclosed  land  is  better  than  four  acres  in  common,"  and  his 
comments  show  that  the  result  of  enclosing  was  to  promote 
improvements  which  enormously  increased  production.  He 
says :  "A  load  of  pigeon  dung  exchanged  for  a  load  of  coals 
and  carried  sixteen  miles,  though  it  would  have  done  harm 
where  it  came  from,  would  confer  a  double  value  on  the 
land  where  it  was  put.  I  have  seen,"  he  said,  "a  hundred 
Toads  of  earth  sold  at  Hampstead  at  one  shilling  a  load  and 
carried  three  or  four  miles  to  higher  ground,  and  with  great 
advantage.  I  have  known  meadow  land  so  improved  by 
irrigation  that  though  it  was  worth  only  ten  shillings  a  year 
it  has  grown  £io  worth  of  hay  in  a  dry  season,  and  I  have 
seen  land  near  London  on  which  irrigation  at  the  cost  of  a 
shilling  has  raised  the  value  by  a  pound."  This  astute  ob- 
server inferred  that  all  the  land  must  have  once  been  sea  and 
that  all  valleys  have  at  some  time  been  channeled  by  water.* 

Testimony  such  as  this  carries  conviction  that  some 
stronger  incentive  than  the  mere  desire  for  subsistence  is 
necessary  to .  induce  men  to  compel  the  earth  to  yield  its 
best  results.  The  history  of  English  agriculture  seems  to 
demonstrate  conclusively  that  land  in  abundance  will  not 
promote  prosperity  if  it  is  no  man's  land,  and  it  also  raises 
a  doubt  whether  the  assumption  that  it  is  always  a  natural 
boon  is  not  a  far  fetched  one.  There  are  regions  where 
man  needs  but  scatter  the  seeds  in  the  soil  to  get  returns,  but 


♦Platte'.s  Gabriel,  1638;  quoted  by  Rogers  in  Six  Centuries  of  Work 
and  Wages,  p.  458. 


CONSUMERS  427 

there  are  other  places  where  as  much  preparation  of  the  land 
is  required  for  agricultural  purposes  as  though  it  did  not 
exist.  Indeed,  the  Hollanders,  from  whom  the  English 
have  copied  so  liberally,  wrested  much  of  their  best  land 
from  the  sea,  and  in  England  there  exist  to-day  millions  of 
acres  which  would  be  worthless  for  purposes  of  cultivation 
if  they  had  not  been  recovered  from  niggard  nature  by  such 
means  as  those  described  above. 

In  1649  another  author  on  husbandry  quoted  by  Rogers 
wrote :  "If  a  tenant  be  at  ever  so  great  pains  or  cost  for 
the  improvement  of  his  land  he  doth  thereby  but  occasion 
a  great  rack  upon  himself,  or  else  invests  his  landlord  with 
his  cost  and  labor  gratis,  or,  at  best,  lies  at  his  landlord's 
mercy  for  requital,  which  occasions  a  neglect  of  good  hus- 
bandry to  his  own,  the  land,  the  landlord  and  the  Kingdom's 
suffering.  Now  this  I  humbly  conceive  may  be  removed  if 
there  were  a  law  enacted  whereby  every  landlord  should  be 
obliged  either  to  give  him  reasonable  allowance  for  his 
clear  improvement  or  else  suffer  him  or  his  to  enjoy  it  so 
much  longer  as  till  he  hath  had  a  proportionate  requital."* 

The  English  are  a  slow  moving  people,  and  it  took  then^. 
nearly  two  centuries  and  a  half  to  act  on  this  suggestion, 
and  then  they  only  did  so  in  that  part  of  the  United  King- 
dom threatened  with  insurrection.  It  is  obvious,  however, 
that  the  remedy  is  only  a  partial  one,  and  that  nothing 
short  of  the  adoption  of  a  system  which  will  tend  to  the 
dispersion  of  large  holdings  of  land  will  suffice  to  call  into 
play  that  individual  desire  for  gain  which  has  done  so 
much  to  promote  the  progress  of  the  arts  and  sciences. 

It  is  not  contended  here  that  private  ownership  of  land 
when  the  ability  to  monopolize  it  exists  can  prove  beneficial, 
but  that  its  division  into  moderate  parcels,  owned  by  men 
who  will  absolutely  enjoy  all  the  fruits  of  the  improvements 
they  make,   must  necessarily  be   so.     Experience   demon- 

♦Rogers.   Six  Centuries  of  Work  and  Wages,  p.  458. 


428         PROTECTION   AND  PROGRESS 

strates  that  this  is  the  case  just  as  surely  as  it  has  been 
demonstrated  in  all  times  and  in  all  countries  that  every 
man's  land  is  no  man's  land. 

It  is  true  that  the  author  whose  pages  we  have  so  freely 
drawn  upon  may  be  differently  interpreted.  He  tells  us 
that  the  agricultural  laborer  was  better  conditioned  several 
centuries  ago  in  England  than  he  was  at  the  beginning  of 
the  nineteenth  century,  but  his  elaborate  efforts  to  show 
this  by  quoting  prices  and  wages  are  discredited  by  other 
circumstances  to  which  he  directs  attention.  He  says  for 
example  that  "during  the  seventeenth  century  the  popula- 
tion of  England  had  doubled.  It  could  not  have  been  more 
than  two  and  a  half  millions  at  the  conclusion  of  Elizabeth's 
reign ;  it  was  nearly  five  and  a  half  at  the  accession  of 
Anne."*  Elsewhere  he  remarks :  "From  another  point  of 
view,  and  that  by  far  the  most  accurate  and  exact,  the  rela- 
tive position  of  the  workman  was  one  of  far  more  hope  and 
far  more  plenty  in  the  days  of  the  Plantagenets  than  it  has 
been  in  those  of  the  house  of  Hanover;  that  wages  were, 
relative  to  their  purchasing  power,  far  higher,  and  the  en- 
joyable income  over  necessary  expenditure  was  in  conse- 
quence far  wider."t 

These  two  statements  seem  opposed  to  each  other.  The 
conclusion  reached  is  certainly  at  variance  with  the  com- 
monly accepted  belief  that  a  stationary  population  is  not 
an  indication  of  great  material  prosperity.  During  the  two 
centuries  and  a  half  (1154  to  1399)  embraced  in  the  reigns 
of  the  Plantagenets  population  did  not  increase  and  there 
was  plenty  of  discontent,  facts  which  do  not  harmonize  with 
the  theory  that  the  people  of  England  were  enjoying  an 
abundance  of  the  fruits  of  the  land. 

It  is  not  difficult  to  assent  to  the  idea  advanced  by 
Rogers  in  another  connection  that  material  prosperity  is 


*  Rogers,  Six  Centuries  of  Work  and  Wages,  p.  463. 
■(■Ibid,  p.  490- 


CONSUMERS  429 

frequently  the  mainspring  of  political  dissatisfaction  and 
that  it  has  a  tendency  to  promote  religious  reformation,  but 
no  one  will  be  inclined  to  regard  the  outbreak  in  England  in 
1381  as  the  result  of  overflowing  granaries  and  low  prices. 
Rogers  tells  us  that  "the  years  which  preceded  the  Peasants' 
War  in  England  were  times  of  high  wages  and  low  prices." 
That  "the  means  of  life  were  abundant,  the  earnings  of  the 
laborer  exceptionally  great,"  and  that  "the  teachings  of  the 
poor  priests  were  addressed  to  men  whose  prospects  were 
far  higher  than  those  of  their  fathers,  whose  opportunities 
were  greater  and  more  immediate  than  those  of  their  remote 
descendants."* 

We  suspect  that  this  view  is  as  fallacious  as  many  more 
to  which  the  distinguished  author  has  readily  subscribed 
and  that  there  is  absolutely  no  foundation  for  his  oft  re- 
peated opinion  that  the  English  laborer  in  the  Middle  Ages 
was  a  comparatively  happy  creature,  whose  nom^inal  wages, 
though  low,  had  an  extraordinary  purchasing  power  which 
gave  him  a  greater  command  over  the  necessaries  of  life 
than  that  enjoyed  by  his  toiling  successors. 

There  was  no  one  more  prone  than  Rogers  to  unspar- 
ingly condemn  the  practice  of  drawing  far-fetched  infer- 
ences from  statistics,  but  there  is  not  extant  a  more  glaring 
instance  of  this  propensity  than  is  furnished  by  him  in  his 
attempt  to  make  it  appear  that  the  cheapness  of  the  Middle 
Ages  was  an  unmixed  blessing.  His  citations  from  the 
rolls  of  bailiflfs,  which  show  relatively  high  wages  and  phe- 
nomenally low  prices,  he  presents  as  conclusive  evidence  of 
the  conditions  he  describes,  but  he  spoils  his  picture  by  the 
admission  of  the  historical  fact  that  the  classes  he  describes 
as  happy  were  in  a  constant  state  of  opposition  to  their 
employers  and  were  conspiring  to  overturn  the  existing 
society  in  order  to  establish  a  communal  method  of  govern- 
ment     It  is  difficult  to  reconcile  the  conclusion  that  the 

♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  271, 


430         PROTECTION   AND   PROGRESS 

laborers  and  artisans  of  the  Plantagenet  period  had  reason 
to  be  satisfied  with  their  lot  with  the  statement  that  com- 
binations were  formed  by  the  peasants  to  protect  themselves 
against  the  aggressions  of  the  landlords  which  took  the 
form  of  regulating  wages  by  law. 

We  may  discern  in  this  effort  to  demonstrate  that  the 
worker  in  the  Middle  Ages  was  happy  a  vain  attempt  to 
bolster  the  theory  that  "wages  have  always  increased  abso- 
lutely, i.  e.,  in  their  money  amount,  and  relatively,  i.  e.,  in 
their  purchasing  power,  when  prices  were  low."*  The 
purpose  is  to  convince  the  laboring  classes  of  to-day  that 
their  truest  interest  would  be  forwarded  by  adhering  to 
the  policy  which  elevates  the  consumer  to  the  first  place  in 
economics,  without  asking  whether  he  contributes  anything 
to  the  general  stock  of  wealth  or  is  entitled  for  any  reason 
whatever  to  share  in  the  advantages  which  flow  from  the 
adoption  of  labor-saving  appliances  and  other  improved 
methods  of  production. 

If  the  reader  of  these  pages  who  happens  to  be  familiar 
with  the  writings  of  Rogers  thinks  that  I  quote  him  too 
freely  or  go  to  extremes  in  pointing  out  the  contradictions 
in  which  he  has  involved  himself  in  his  endeavor  to  defend 
the  theories  of  the  Cobdenites,  I  beg  him  to  remember 
that  I  have  stated  that  Rogers,  as  the  foremost  champion  of 
free  trade,  is  the  proper  target  of  a  protectionist,  and  that 
his  writings  have  been  freely  used  because  his  habit  of  ex- 
nressing  himself  dogmatically  makes  it  easy  for  an  oppo- 
nent, by  quoting  him,  to  show  the  inconsistencies  of  the 
followers  of  the  Manchester  school. 

Although  an  extreme  advocate  of  laisses  faire,  Rogers 
did  not  hesitate  to  say  that  "employers  will  get  labor  cheap 
if  they  can ;  it  is  the  business  of  the  state,"  he  declares, 
"to  prevent  them  getting  it  so  cheaply  that  they  imperil 
the  future  of  the  race  by  the  process ;  and  it  is  the  business 

*Rogers,  Six  Centuries  of  Work  and  Wages,  p.  527. 


CONSUMERS.  431 

of  particular  crafts  of  workmen  to  sell  their  labor  at  as 
good  a  price  as  they  can."*  Now,  this  is  most  excellent 
protectionist  doctrine  and  is  lived  up  to  in  all  countries 
where  the  tariff  is  adjusted  with  the  sole  view  of  equalizing 
labor  conditions  in  different  countries.  But  it  is  impossible 
to  reconcile  this  advice  to  the  laboring  man  to  combine 
in  order  to  raise  wages,  and  incidentally  prices,  with  Cob- 
denite  theories,  and  the  attitude  Rogers  here  assumes  to- 
wards the  middleman  seems  to  be  as  hostile  to  the  teachings 
of  the  Manchester  school  extremists  as  it  is  fatal  to  the 
assumption  that  scarcity  of  land  is  the  source  of  modern 
economic  troubles. 

Speaking  of  the  now  generally  recognized  vice  of  the 
multiplication  of  middlemen,  Rogers  says :  "There  is  a 
superstition  among  old-fashioned  economists  that  all  parties 
are  the  better  for  the  middleman.  Experience  is  gradually 
proving  that  the  abstract  theory  is  incorrect.  Hence,  under 
competition  producers  are  getting  rid  of  the  middleman,  and 
the  modern  economist  who  studies  the  facts  instead  of  spin- 
ning theories  and  dilating  on  tendencies  is  beginning  to 
prove  that  he  is  generally  a  nuisance.  Now  that  a  man  who 
wins  more  food  from  the  earth  is  more  useful  than  one  who 
wins  more  food  from  somebody  else's  labor  without  offering 
anything  solidly  desirable  for  his  function  needs  no  proof. 
If  you  can  entirely  get  rid  of  the  middleman,  all  the  better ; 
if  you  cannot,  it  is  an  economy,  which  even  he  can  hardly 
dispute,  to  narrow  his  functions  and  curtail  his  profits."! 

The  reader  will  not  have  overlooked  the  fact  that  in 
another  connection  Rogers  gave  expression  to  the  view  that 
the  vice  he  complains  of  might  be  eradicated  by  the  tendency 
towards  combination,  which,  in  defiance  of  laisse::  faire 
ideas,  he  thought  would  be  desirable  because  of  its  pro- 
pensity  to   eliminate   the   middleman.      In   discussing   the 

♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  528. 
flbid,  p.  475. 


432         PROTECTION   AND   PROGRESS 

Middle  Age  attempt  to  regulate  prices  he  remarked :  "Even 
now  it  is  doubtful  whether  competition  is  of  universal  effi- 
cacy, and  whether  it  is  not  more  correct  to  say  that  where 
combination  is  possible  competition  is  inoperative.  Hence, 
we  subject  some  callings  to  regulated  prices,  and  it  may  be 
doubted  whether  the  progress  of  opinion  will  not  hereafter 
enlarge  the  area  of  regulated  prices.  Still  the  inclination 
of  people  is  as  yet  to  let  prices  find  their  level  by  competition 
in  every  case  where  distinct  proof  is  not  given  that  such  a 
concession  would  be  unsafe  or  unfair."* 

Here  is  a  clear  case  of  indecision,  which  is  pardonable, 
for  the  subject  is  one  which  cannot  be  decided  out  of  hand, 
and  one  which  may  call  for  much  more  experience  before 
we  can  fairly  make  up  our  minds.  But  there  is  no  ground 
for  Rogers'  assumption  that  it  is  "the  inclination  of  people 
to  let  prices  find  their  level  by  competition  where  distinct 
proof  is  not  given  that  such  a  concession  would  be  unsafe 
or  unfair."  Unless  the  free  trade  champion  assumes  that 
the  only  people  to  be  considered  in  the  discussion  of  eco- 
nomic questions  are  those  of  Great  Britain  it  will  be  ad- 
mitted that  the  tendency  is  the  reverse  and  that  there  is  no 
universal  disposition  to  permit  unrestrained  competition. 
The  people  of  the  United  States  and  of  the  whole  continent 
of  Europe  are  well  agreed  that  unrestrained  competition 
would  be  injurious  to  national  development  and  they  have 
rejected  the  policy  of  Cobden ;  and  it  may  be  added  that  in 
this  country  a  pronounced  disposition  exists  to  regulate  the 
growing  tendency  to  combine,  which  may  be  regarded  as  the 
natural  development  of  the  competitive  process. 

Rogers  recognizes  the  economic  possibilities  of  com- 
binations, and  even  assumes  that  they  may  be  beneficial,  but 
he  has  been  careful  to  formulate  a  theory  that  the  main- 
tenance of  a  pernicious  trust  for  any  considerable  period  is 
impossible.     He  argues  that  the  attempt  to  elevate  prices 

*Rogers,   Six  Centuries  of  Work  and  Wages,  p.   139. 


CONSUMERS.  433 

above  the  level  which  they  would  have  if  competition  were 
permitted  free  play  must  fail,  because  it  would  be  the  signal 
for  fresh  capital  to  enter  the  lists  and  seek  to  divide  the 
profits,  and  thus  compel  the  restoration  of  normal  condi- 
tions. But  experience  in  this  country  has  demonstated 
that  this  is  not  true.  The  history  of  the  iron  and  steel 
trust  shows  that  so  long  as  prosperity  reigned  in  the  United 
States  the  trust  was  able  to  maintain  prices  by  the  simple 
device  of  absorbing  all  would-be  competitors,  and  that  dis- 
solution only  followed  when  consumption  had  fallen  off  to 
such  an  extent  that  the  members  of  the  pool  could  not  agree 
as  to  the  shares  of  business  to  which  they  were  respectively 
entitled.  As  soon  as  the  consumptive  ability  of  the  Ameri- 
can people  reasserted  itself  the  members  of  the  temporarily 
disbanded  combine  began  to  approach  each  other,  and  at  the 
present  time  of  writing  (August,  1898)  the  signs  of  a 
complete  agreement  and  a  restoration  of  the  old  monopoly 
are  multiplying.* 

It  was  because  Rogers  recognized  that  combinations 
are  enabled  by  effective  organization  and  improved  proc- 
esses of  production  to  greatly  cheapen  products  that  he 
was  so  easily  induced  to  overlook  the  numerous  evils  they 
must  certainly  bring  in  their  train.  The  Cobdenite  habit  of 
regarding  cheapness  as  the  great  economic  end  warped  his 
judgment  and  prevented  his  seeing  that,  while  trusts  may 
prove  effective  as  an  eliminator  of  a  large  class  of  middle- 
men whose  uselessness  to  society  may  be  conceded,  their 
erection  necessarily  has  the  effect  of  multiplying  the  mem- 
bers of  another  class  who  would  find  it  as  difficult  to  estab- 
lish a  claim  to  be  maintained  as  the  middleman  whose 
usefulness  is  open  to  question.  But  the  subject  has  per- 
plexities for  others  than  the  author  of  "Work  and  Wages." 
We  can  all  perceive  the  inutility  of  maintaining  rows  of 

*The   steel   combination,   which   was   broken   by   the   depres-sion   of 
1893-97,  was  freshly  entered  into  in   1S98,  when  prosperity  set  in  and 
prices,  owing  to  a  rapidly  expanding  consumption,  were  increasing. 
28 


434         PROTECTION  AND  PROGRESS 

stores  on  the  same  street  devoted  to  the  sale  of  the  same 
class  of  goods  and  may  agree  with  Rogers  that  they  might 
be  dispensed  with,  but  when  we  ask  who  would  be  the 
gainers  by  the  change  the  answer  does  not  come  swiftly. 
As  matters  stand  at  present  there  is  doubt  whether  society 
at  large  or  merely  an  insignificant  part  of  it  would  be  bene- 
fited by  wiping  out  the  superfluous  middleman. 

No  one  will  dispute  the  force  of  a  showing  such  as  that 
derived  from  the  pages  of  "Work  and  Wages"  in  which  the 
low  cost  of  building,  the  method  of  the  builder  and  the  ex- 
cellence of  his  work  in  the  Middle  Ages  is  described  and 
attributed  to  the  absence  of  the  middleman.  "I  have  already 
stated,"  says  Rogers,  "that  in  the  past  which  I  have  been 
contrasting  with  the  present  the  relation  of  employer  and 
employed  was  exceedingly  direct ;  nor  do  I  doubt  that  it 
was  to  this  directness  that  the  high  remuneration  of  the 
citizen  was  due.  A  church  or  a  mansion  was  to  be  built,  a 
new  wing  or  new  offices  to  be  added  to  a  conventual  house 
or  college.  Perhaps  the  owner  supplied  the  plans.  If  not, 
the  master  mason  knew  how  *to  draw  his  plot,'  and  the 
master  carpenter  his.  Tlie  employer  bought  all  the  raw 
materials  direct  from  the  manufacturers  and  put  them  ready 
for  use  on  the  spot.  He  could  calculate  within  a  very  mod- 
erate margin  what  the  whole  would  cost  and  what  would 
be  the  charge  of  labor. 

"In  the  building  to  which  I  have  referred  (Tower  of 
Rochester  Castle)  the  cost  of  materials,  on  much  of  which 
labor  is  expended,  was  £54  los  3^d ;  of  labor  £73  os  ^d ; 
and  the  extras  connected  with  the  structure,  but  not  im- 
mediately associated  with  the  labor  and  materials,  £14  9s  ^d. 
Thus,  in  the  aggregate  charge,  the  cost  of  materials  is  38.3 
per  cent.;  that  of  labor  51.4  per  cent;  and  of  extras  10.3 
per  cent.  The  multiple  of  twelve  would  put  this  structure 
at  a  cost  of  ;£  1,703  12s  6d,  from  which  should  be  deducted 
the  sale  of  certain  cranes,  worth,  on  the  same  estimate,  £73 
I2S,  and  therefore  leaving  i  1,630. 


CONSUMERS.  435 

"Now  I  make  no  doubt  that  at  the  present  day  the  tower 
would  cost  from  ^4,000  to  £5,000,  and  I  infer  that  the 
additional  cost  would  be  entirely  due  to  the  charge  of  con- 
tractors' profit,  architect's  commissions  and  middlemen's 
advantages.  It  is  upon  the  saving  of  this  enormous  waste 
that  the  energies  of  the  intelligent  employer  are  directed, 
and  the  advocates  of  increased  wages  for  workmen  should 
be.  When  the  economy  is  effected  it  will  be  found,  con- 
currently with  another  reduction  of  charge  alluded  to  al- 
ready, that  workmen  may  get  better  wages  and  may  be  more 
cheaply  housed.  It  is  assuredly  from  the  stint  of  wages 
that  the  profits  of  middlemen  have  been  derived."* 

We  fancy  that  no  one  who  is  at  all  familiar  with  the 
processes  of  modern  trade  will  be  greatly  surprised  by  an 
exposition  such  as  this,  which  shows  that  the  toll  takers 
from  production  in  modern  times  make  building  cost  fully 
threefold  what  it  did  in  the  Middle  Ages.  An  inquiry 
into  the  actual  working  of  the  system  of  unlimited  compe- 
tition will  develop  that  the  influence  of  the  middleman  on 
the  cost  of  building  does  not  stand  as  an  isolated  phenom- 
enon. On  the  contrary,  it  can  be  easily  shown  that  in  nearly 
every  line  of  production  the  cost  of  the  article  produced  is 
enormously  increased  to  the  consumer  by  the  exactions  of 
the  middleman.  But  the  free  trader,  whose  eagerness  for 
cheapness  makes  him  an  advocate  of  unlimited  and  unre- 
strained competition,  tries  to  close  his  eyes  to  its  drawbacks 
and  refuses  to  see  that  it  aggravates  the  evil  referred  to. 

The  practice  of  overcapitalizing  resorted  to  by  pro- 
moters of  transportation  companies  and  industrial  enter- 
prises is  merely  another  form  of  this  system  of  toll  taking, 
for  it  serves  to  enhance  the  cost  of  things  consumed  aS 
effectually  as  the  multiplication  of  middlemen.  The  process 
is  simply  disguised  by  substituting  the  bond  or  stock  holder 
for  the  eliminated  middleman.     When,  to  illustrate,  a  rail- 


*Rogers,  Six  Centuries  of  Work  and  Wages,  p.  544. 


43^'         PROTECTION   AND   PROGRESS 

road  is  made  to  pay  interest  and  dividends  on  a  capitaliza- 
tion three  or  four  times  as  large  as  the  real  investment,  the 
excessive  charges  imposed  on  the  consumer  are  as  severely 
felt  as  though  they  were  drawn  from  them  by  middlemen. 

If  those  who  agree  with  Rogers  that  the  middlemen  are 
taking  the  lion's  share  of  the  profits  of  modern  production, 
and  that  while  they  do  so  it  must  be  impossible  for  the 
workingman  to  greatly  better  his  condition,  would  examine 
the  matter  carefully  they  would  speedily  discover  that  com- 
binations must  intensify  rather  than  abate  the  troubles  of 
the  industrial  classes.  It  does  not  require  extraordinary 
penetration  to  discover  that  the  elimination  of  unnecessary 
middlemen  cannot  be  an  economic  gain  if  their  places  are 
filled  by  owners  of  capital,  who,  by  combining,  can  make 
their  investments  yield  greater  returns  than  when  they  are 
arrayed  against  each  other.  And  it  must  be  obvious  that 
the  workers  who  are  deprived  of  a  chance  to  earn  a  liveli- 
hood by  the  practice  of  economics  inuring  entirely  to  the 
benefit  of  bond  or  stock  holders  would  suffer  greatly.  The 
wage  earner  who  succeeded  in  retaining  employment  might 
for  a  time  receive  better  compensation ;  but  how  about  the 
vast  number  that  would  necessarily  be  added  to  the  sub- 
merged class  by  the  process  of  combination?  Would  they 
be  benefited  by  the  change?  Would  the  diminished  cost  of 
production  help  them  ?  They  would  still  be  consumers, 
those  who  did  not  starve,  but  cheap  food  and  cheap  articles 
are  dear  to  those  who  have  not  the  wherewithal  to  buy  them. 

When  we  examine  the  figures  which  bear  on  the  possible 
consequences  of  the  elimination  of  the  mere  toll  gatherer 
from  production  we  are  appalled  at  their  significance.  The 
unnecessary  middlemen  are  so  numerous  that  to  deprive 
them  of  the  opportunity  to  prey  upon  the  producer  might 
force  a  revolution.  Should  they  be  compelled  by  means  of 
combinations  to  join  the  ranks  of  the  submerged,  driven 
from  employment  by  improved  and  automatic  machinery,  a 
resort  to  state  socialism  would  be  the  inevitable  outcome. 


CONSUMERS.  437 

A  much  quoted  American  writer  has  made  an  inquiry 
into  the  possible  results  of  dispensing  with  the  superfluous 
middleman  by  compiling  the  facts  bearing  on  production 
and  distribution  in  the  United  States  that  are  contained  in 
the  census  of  1880.  He  prefaces  his  introduction  of  the 
figures  with  some  remarks  pertinent  to  the  subject.  "There 
are,"  he  says,  "certain  ethical  problems  which  may  come 
into  view  to  him  who  seeks  to  justify  his  own  greater  share 
in  the  comforts  of  life.  One  question  which  a  man  may  put 
to  himself  might  be :  Does  the  occupation  in  which  I  am 
engaged  add  to  the  mass  of  products  which  are  needed  in 
general  consumption  more  than  is  taken  away  by  my  own 
consumption  or  by  those  among  whom  I  spend  my  earn- 
ings? Or  even  a  deeper  problem  may  sometimes  arise  of 
an  ethical  nature.  Does  the  work  which  each  man  performs 
come  within  the  line  of  useful  service?  Does  it  add  to  the 
stock  of  useful  products,  or  does  it  fall  within  the  line  of 
baneful  service  and  add  to  the  stock  of  harmful  products? 
Is  the  demand  for  which  this  man  provides  the  supply  of 
a  kind  which  adds  to  the  comfort  of  the  community  as  a 
whole,  or  is  it  one  which  tends  toward  want  rather  than 
welfare?  By  the  answer  to  these  questions  each  man  may 
hereafter  be  judged  in  the  court  which  supplements  the 
treatment  of  economic  questions  by  the  study  of  ethics."* 

Having  laid  this  foundation,  he  proceeds  to  an  analysis 
of  the  disclosures  of  the  census  and  finds  that  the  following 
were  the  proportions  of  those  employed  in  gainful  occupa- 
tions in  the  census  year,  the  number  so  engaged  being  about 
one-third  of  the  whole  population : 

Occupied  in  agriculture  7,670,493 

Occupied  in  professions  and  personal  service 4,074,258 

Occupied  in  manufactures,  mechanics,  arts  and  mining....   3,837,112 

Occupied  in  trade  and  transportation 1,810,256 

17.392,099 

*Atkinson,  The  Industrial  Progress  of  the  Nation,  p.  204. 


438         PROTECTION  AND  PROGRESS 

A  further  compilation  is  made  by  the  author  we  are 
quoting  under  seven  titles,  as  follows : 

Mental  Work. — Clergymen,  64,968;  lawyers,  64,137; 
pliysicians  and  surgeons,  85,671  ;  teachers  and  literary,  227,- 
710;  journalists,  12,308;  scientists  and  engineers,  8,126; 
musicians,  30,477 ;  officers  of  corporations,  banks,  railroads, 
insurance,  etc.,  202,423.    Total,  696,000. 

Mental  and  Manual. — Merchants  and  traders,  481,- 
450;  hotel  keepers,  32,543;  clerks,  salesmen,  commercial 
travelers,  brokers  and  all  others  engaged  in  the  purchase 
and  sale  of  goods,  521,898.    Total,  1,044,000. 

Automatic  Machinery. — Collective  factory  work,  tex- 
tiles, printing  and  bleaching,  500,000;  metals  and  machin- 
ery, 300,000;  clothing  450,000;  boots  and  shoes  and  hats, 
210,000;  all  others,  280,000.    Total,  1,740,000. 

Mechanical. — Hand  and  machine  tools :  mechanical 
and  collective :  carpenters  and  other  workers  in  wood,  500,- 
000;  blacksmiths,  172,726;  painters,  128,556;  masons, 
102,473;  all  others,  958,045.    Total,  1,861,800. 

Manual. — Service:  express,  railroad,  telegraph  em- 
ployes (not  laborers),  300,000;  domestic  servants,  1,075,- 
655;  laundry,  123,000;  waiters,  200,000;  draymen,  hack- 
men,  etc.,  180,000;  all  others,  391,345.    Total,  2,279,400. 

Horse  and  Hand  Tools. — Farmers,  herdsmen,  stock 
breeders  and  the  like,  4,350,000. 

Chiefly  Manual. — Laborers  on  farms,  3,323,876; 
laborers  not  specified,  probably  in  part  on  farms,  1,857,023; 
miners,  240,000.    Total,  5,420,899. 

It  would  be  idle  for  any  one  to  attempt  to  determine 
exactly  what  proportion  of  the  above  categories  should  be 
characterized  as  unnecessary  middlemen  or  toll  gatherers 
from  production.  A  very  cursory  examination  of  the  details 
will,  however,  tend  to  convince  any  candid  student  that  it 
is  large.  Let  us  take  the  first  subdivision — that  relating  to 
mental  work — and  ask  the  question :  How  many  of  those 
included  in  the  total  of  696,000  add  to  the  stock  of  useful 


CONSUMERS.  439 

products  or  minister  to  the  wants  of  those  who  do?  How 
many  of  the  64,968  clergymen  are  devoted  to  advancing  the 
reHgious  welfare  of  workers?  Of  the  85,671  physicians  do 
not  by  far  the  largest  number  devote  themselves  to  curing 
the  ailments  of  the  well-to-do  non-producer?  Of  those  en- 
gaged in  teaching  and  literature,  over  227,000,  how  many 
are  concerned  in  improving  the  mental  condition  of  the 
working  and  producing  classes?  The  number  of  scientists 
and  engineers  is  set  down  as  8,126;  are  they  all  employed 
in  useful  work?  The  30,477  musicians  enumerated,  did 
they  employ  their  art  to  lighten  the  labors  of  the  producer 
or  to  dissipate  the  ennui  of  those  without  occupation  ?  How 
many  of  the  202,423  officers  of  corporations,  banks,  rail- 
roads, insurance  companies  were  figure-heads  permitted  to 
draw  large  salaries  for  the  management  of  concerns  in 
which  they  invested  capital? 

Of  the  nearly  700,000  above  enumerated  perhaps  one- 
half  may  have  been  parasites  of  the  kind  described  by  Rog- 
ers. When  we  turn  to  the  second  classification,  "Mental 
and  Manual,"  and  apply  the  same  questioning  process  we 
are  forced  to  conclude  that  it  embraces  many  whose  occu- 
pation is  chiefly  that  of  dissipating  or  wasting  the  wealth 
of  the  producer.  How  many  merchants  and  traders  were 
there  in  the  481,450  whose  services  might  not  have  been 
dispensed  with  without  the  communities  in  which  they  oper- 
ated feeling  a  sense  of  loss?  What  proportion  of  the  32,543 
hotel  keepers  maintained  hostelries  merely  for  the  accom- 
modation of  the  well-to-do,  and  how  many  of  the  521,898 
salesmen,  commercial  travelers,  brokers,  etc.,  would  really 
be  needed  by  society  if  the  unscientific  system  of  competition 
were  displaced  by  a  highly  organized  method  of  distribution 
such  as  that  which  combination  secures? 

The  remaining  categories  of  these  titles  would  convey 
the  impression  that  they  included  none  but  those  employed 
in  really  useful,  gainful  occupations,  but  if  we  ask  ourselves 
how  many  of  the  500,000  engaged  in  manufacturing  textiles 


440         PROTECTION   AND   PROGRESS 

are  working  for  the  classes  which  never  produce  we  are 
disturbed  by  the  answer.  We  all  know  that  while  a  large, 
indeed,  the  major  part  of  those  so  engaged  are  producing 
staples,  the  number  who  are  devoted  to  the  production  of 
mere  luxuries,  destined  for  the  consumption  of  those  who 
do  not  work,  is  very  great.  Those  employed  in  the  me- 
chanic artS' — carpenters,  masons,  painters,  blacksmiths  and 
others — are  also  in  large  part  devoted  to  the  service  of  the 
non-producer.  If  the  facts  could  be  arrived  at  it  would 
probably  be  seen  that  the  major  part  of  the  wages  earned 
by  the  classes  of  labor  last  mentioned  are  derived  from  min- 
istering to  the  pleasures  of  the  rich.  It  costs  more  to  build 
a  handsome  residence  for  a  merchant  prince  or  a  successful 
contractor  or  railroad  exploiter  than  it  does  to  built  six 
blocks  of  houses  for  deserving  workmen.  Three  thousand 
people  are  huddled  into  a  tenement  in  Vienna,  which,  im- 
posing as  it  is  in  appearance  and  a  decided  advance  in  point 
of  comfort  over  similar  housing  facilities  of  the  working 
classes,  perhaps  did  not  cost  half  as  much  to  construct  as 
many  private  mansions  in  the  same  city. 

And  so  we  might  go  through  the  list  without  shaking 
the  conviction  that  an  immense  proportion  of  the  whole 
17,392,099  said  to  be  employed  in  gainful  occupations  are 
not  assisting  in  the  work  of  production.  We  certainly 
would  find  as  the  result  of  such  an  examination  that  the 
greater  part  of  the  1,075,655  domestic  servants,  the  200,000 
waiters,  the  180,000  draymen  and  hackmen,  and  the  dubious 
category  which  includes  4,350,000  farmers,  herdsmen,  stock 
breeders  and  the  like,  was  made  up  of  toll  gatherers  who 
might  be  eliminated  without  materially  reducing  the  volume 
of  useful  production. 

But  who  will  be  rash  enough  to  advocate  such  elimina- 
tion ?  Not  the  attentive  student  of  the  work  of  Rogers,  for. 
although  he  assumes  in  some  parts  of  his  writings  that  the 
extinction  of  the  useless  middleman  would  inure  to  the 
benefit  of  the  wage  earner,  in  other  places  he  significantly 


CONSUMERS.  441 

warns  against  the  dangers  which  would  follow  a  radical 
disturbance  of  the  existing  order.  He  tells  us  "it  is  one  of 
the  commonplaces  of  ignorant  optimism  to  allege  that  the 
remedy  is  supplied  by  taking  away  the  cause  of  the  disease ; 
but  the  maxim  that  the  effect  ceases  when  the  cause  ceases 
is  true  in  organic  nature  only,  and  not  always  true  there. 
The  present  condition  of  English  society,  its  violent  con- 
trasts of  opulence  and  penury,  of  profligacy  protected  by 
law,  and  misery  neglected  by  law,  is  the  outcome  of  causes 
which  have  a  longer  pedigree  than  the  recorded  generations 
of  any  family.  The  people  of  Great  Britain,"  he  adds, 
"have  become  what  they  are  by  reason  of  events  and  acts 
which  it  is  the  duty  of  the  genuine  economist  to  discover, 
as  contrasted  with  the  economist  who  constructs  a  system 
out  of  a  few  axioms  and  a  multitude  of  postulates."* 

Rogers,  whose  contradictory  conclusions  are  an  evi- 
dence of  the  sincerity  of  his  work,  thought  that  he  at  least 
would  not  be  obnoxious  to  the  criticism  that  he  tried  to 
construct  a  system  "out  of  a  few  axioms."  But  he  is  in- 
finitely narrower  than  the  economists  he  condemns,  for  the 
work  of  his  life  has  been  to  demonstrate  that  cheapness  is 
the  greatest  boon  that  man  can  enjoy,  and,  while  he  has  tried 
to  exhibit  a  rare  sympathy  for  the  workingman,  he  has  per- 
sistently advised  a  course  of  action  which  must  inevitably 
tend  to  degrade  the  worker.  Even  his  panacea — that  of 
eliminating  superfluous  middlemen,  while  retaining  the  cap- 
italistic parasite — is  open  to  the  objection  that  it  would  still 
further  swell  the  number  of  those  obliged  to  maintain  them- 
selves by  useful  work,  and,  by  pitting  them  against  each 
other,  would  make  it  impossible  for  them  to  emerge  from  a 
condition  of  dependence. 

But  the  parasites  of  industry  cannot  be  eliminated  so 
long  as  the  competitive  system  prevails ;  therefore  we  should 
study  how  to  minimize  the  advantages  they  enjoy  and  hot 

♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  435. 


442         PROTECTION   AND   PROGRESS 

assist  in  increasing  them.  That  the  cheapening  of  prod- 
ucts at  the  expense  of  the  producer  contributes  materially 
to  widening  the  breach  between  those  who  have  in  abund- 
ance and  they  who  seek  an  opportunity  to  earn  a  living  can 
easily  be  demonstrated.  If  the  rich  man  who  employs  a 
retinue  of  servants  can  succeed  in  cutting  down  the  cost  of 
production  of  wheat  he  not  only  benefits  from  the  reduced 
price  of  what  he  personally  consumes ;  he  is  also  a  benefi- 
ciary by  the  amount  he  saves  in  the  reduced  cost  of  the  main- 
tenance of  all  those  who  are  dependent  upon  him  or  who 
minister  to  his  luxury.  In  short,  as  in  the  case  of  the  rain 
which  falls  alike  on  the  just  and  the  unjust,  the  blessings 
of  cheapness  extend  to  those  who  have  no  share  in  bringing 
them  about,  and,  to  continue  the  simile  further,  it  fre- 
quently happens  that  those  who  least  deserve  to  benefit,  like 
the  greedy  appropriators  of  water  in  an  arid  country,  who, 
in  defiance  of  natural  rights,  by  virtue  of  riparian  privileges, 
manage  to  secure  the  lion's  share  of  an  element  as  essential 
to  productivity  as  the  land  itself,  are  the  greatest,  often 
the  sole,  beneficiaries. 

When  we  gather  the  full  import  of  the  figures  quoted  by 
Mr.  Atkinson,  or  investigate  the  extent  of  that  part  of  the 
population  of  Great  Britain  which  under  any  construction 
must  be  regarded  as  unproductive,  we  are  forced  to  con- 
clude that  all  consumers  do  not  stand  on  the  same-plane,  and 
that  no  one  sincerely  desirous  of  promoting  the  welfare  of 
the  classes  actually  producing  will  contend  that  all  are 
alike  benefited  by  low  prices  no  matter  how  they  are  brought 
about.  Such  a  claim  could  only  be  fairly  made  if  all  the 
people  were  engaged  in  the  work  of  production,  and  not 
even  then  if  the  machinery  of  distribution  was  not  carefully 
adjusted  so  as  to  secure  to  every  member  of  society  his 
just  proportion  of  the  reduction.  It  is  absurd  to  contend 
that  a  lessening  of  the  cost  of  manufacturing  inures  equally 
to  the  benefit  of  all  consumers.  As  may  readily  be  shown, 
the  reduction  may  be  entirely  absorbed  by  intermediaries. 


CONSUMERS.  443 

The  cost  of  raising  coal  to  the  dumps  may  be  reduced  30 
cents  a  ton  by  cutting  down  the  wages  of  the  miners,  but 
the  poor  wretch  who  buys  it  by  the  bucket  is  not  hkely  to 
learn  the  fact.  The  farmer  may  be  compelled  by  the  com- 
petition of  the  Indian  ryot  to  sell  his  wheat  at  a  price  which 
will  scarcely  remunerate  him  for  his  toil,  but  the  cost  of  the 
loaf  to  the  British  or  American  workingman  is  not  always 
reduced  in  unison.  Retail  prices  never  move  up  and  down 
in  strict  harmony  with  those  of  the  wholesaler.  They  are 
quick  enough  to  respond  to  the  upward  push,  but  their  fall 
is  never  rapid. 

But  after  all  that  is  said  and  written  on  this  subject  by 
economists,  practical  experience  and  the  judgment  of  the 
masses  will  be  accepted  as  better  testimony  than  statistical 
tables  showing  relative  prices  and  wages.  A  consensus  of 
this  sort  of  opinion  would  certainly  be  that  the  really  dear 
countries  are  those  in  which  the  workingman  thrives  least. 
It  will  be  the  object  of  the  writer  in  the  next  chapter  to  de- 
velop the  fact  that  this  opinion,  though  the  vulgar  one,  is 
sound,  and  to  tell  why  it  is  so. 


CHAPTER  XIX. 

WORKINGMEN  AND  WAGES. 

TRADES  UNIONISM  IN  GREAT  BRITAIN  AND  THE  UNITED  STATES. 

The  benefits  of  a  cheap  loaf — The  chief  beneficiary  of  the  cheap  loaf 
is  the  middleman — The  Orient  as  a  land  of  cheapness — Object 
of  a  protective  tariff  is  to  assist  the  productive  consumer  to 
maintain  himself  against  the  non-producing  consumer — High 
duties  on  competing  products  paid  by  the  well-to-do  classes — 
The  cost  of  the  great  staples  no  longer  affected  by  duties — A 
dear  country  for  the  rich  and  a  cheap  country  for  the  toiler — 
The  part  played  by  the  standard  of  living  in  determining  the 
rate  of  wages — Taxation  of  necessaries  cannot  touch  the  worker 
— Inconsistency  of  the  policy  of  unrestricted  free  trade  and 
labor  combination — Ineffectual  effort  to  promote  international 
trades  unionism — Trades  unionists  moving  towards  socialism 
in  England — Extent  of  the  importation  of  manufactured  goods 
into  Great  Britain — The  desirability  of  competition  recognized 
by  protectionists,  but  regulation  assumed  to  be  necessary — Ad- 
vantages enjoyed  by  trades  unionists  in  the  United  States — Pro- 
tection a  safety  valve  for  social  discontent — Higher  standard  of 
living  of  American  workers  not  due  to  abundance  of  land. 

There  must  have  been  moments  when  Professor  Rogers 
felt  uncertain  about  the  correctness  of  his  theory  that  the 
best  interests  of  mankind  are  subserved  by  a  poHcy  of 
cheapening  regardless  of  its  effects  on  producers,  for  we 
find  him  saying  in  one  of  his  lectures  that  "the  best  eco- 
nomic condition  is  not  that  in  which  the  greatest  amount  of 
produce  is  obtained  at  the  cheapest  rate,  the  greatest  amount 
of  capitalists  pick  up  the  greatest  amount  of  profits ;  but 
one  in  which  the  greatest  amount  of  workmen  can  live  in 
the  greatest  possible  comfort  and  security."* 


*Rogers,  History  of  Commerce  and  Industry  in  England,  p.  343. 

444 


WORKINGMEN    AND    WAGES  445 

It  is  doubtful  whether  the  writer  meant  to  say  exactly 
what  he  expressed  in  this  instance,  for  his  voluminous  work 
on  wages  and  prices  indicates  that  he  had  constantly  in 
mind  the  general  good  and  that  he  instinctively  rejected 
the  hideous  idea  that  a  sound  economic  condition  could 
exist  in  a  society  in  which  there  was  a  large  and  constantly 
increasing  submerged  class.  But  his  testy  denunciation 
of  those  who  suggested  "fair  trade"  as  a  remedy  for  the 
undoubted  agricultural  distress  which  existed  in  England 
when  he  wrote  "Work  and  Wages,"  will  lead  many  to  the 
conclusion  that  Rogers,  in  common  with  Sir  Robert  Giffen 
and  other  extreme  exponents  of  the  Manchester  idea,  shared 
the  opinion  that  it  did  not  matter  much  if  pauperism  vastly 
increased  throughout  the  United  Kingdom  provided  sta- 
tistics could  be  formulated  which  would  show  that  the  num- 
ber of  persons  with  an  increased  income  was  greater  than 
it  was  at  the  beginning  of  the  Cobden  era. 

Although  we  find  the  professor  referring  to  those  who 
differed  from  him  regarding  the  causes  of  the  ruin  which 
was  gradually  overtaking  the  British  farmer  as  "muddle 
headed  and  selfish  protectionists,"  and  hotly  denying  that 
the  farmer's  distress  was  due  to  lower  prices,  his  writings 
invariably  tend  to  create  the  impression  that  he  had  been 
led  astray  by  false  analogies  and  that  had  he  lived  to  ob- 
serve the  workings  of  the  system  he  condemned  he  would 
have  modified  his  views  and  made  them  conform  to  the 
idea  expressed  in  the  passage  quoted  in  this  chapter  in 
which  he  elevates  the  worker  to  the  first  place  in  a  sound 
system  of  economy. 

If  Rogers  had  lived  until  the  present  time  he  would 
no  doubt  be  ready  to  admit  that  the  conclusion  he  reached 
in  1883  respecting  the  cause  of  English  agricultural  dis- 
tress was  erroneous.  He  declared  then  that  "while  it  was 
patent  to  everyone  that  a  vast  amount  of  English  land  was 
going  out  of  tillage  *  *  *  the  mischief  could  not 
have  come  from  lower  prices,"  because  they  were  incon- 


44^^         PROTECTION  AND   PROGRESS 

testibly  higher  than  they  were  ten  years  earHer.*  In  1883 
a  student  of  prices,  especially  one  accustomed  to  embrac- 
ing in  his  view  whole  eras,  as  Rogers  did  in  "Six  Centuries 
of  Work  and  Wages,"  might  easily  have  concluded  that 
the  declines  witnessed  between  1873  and  1883 — the  latter 
being  a  year  of  high  prices  and  exceptional  prosperity — 
were  abnormal,  and,  therefore,  should  not  be  taken  into 
consideration.  But  no  one  surveying  the  trend  of  agri- 
cultural prices  during  the  period  subsequent  to  1883,  and 
the  effect  of  the  fall  in  still  further  changing  the  charac- 
ter of  British  tillage,  would  have  ventured  to  affirm  that 
the  sole  cause  of  the  troubles  of  the  English  farmer  was  ex- 
cessive rent.  Such  an  opinion  became  absolutely  untenable 
when  a  large  proportion  of  the  land  which  was  once  a  source 
of  profit  to  the  British  landlord  and  tenant  could  no  longer 
be  worked  because  of  the  competition  with  cheap  cereals 
from  all  parts  of  the  world  that  flooded  the  markets  of 
Great  Britain. 

If  Rogers  were  still  alive  he  might  perhaps  view  the 
"cheap  loaf"  with  the  same  distrust  that  many  of  his  coun- 
trymen who  were  once  ardent  Cobdenites  now  do.  Profes- 
sor Lecky,  speaking  of  this  tenet  of  the  Manchester  faith, 
tells  us  that  "even  this  last  article  (cheap  food)  is  not  gen- 
erally held  without  qualification.  Cheap  food,  it  is  begin- 
ning to  be  said,  does  not  necessarily  mean  the  very  cheap- 
est, and  a  system  under  which  the  greatest  and  most  im- 
portant of  all  national  industries  is  almost  hopelessly  para- 
lyzed, under  which  land  is  fast  falling  out  of  cultivation, 
and  the  agricultural  population  flocking  more  and  more  to 
the  congested  towns,  cannot  be  really  good  for  the  nation. "-}- 

There  are  too  many  who  corroborate  this  estimate  of 
changed  sentiment  in  England  to  permit  it  to  be  disputed. 
It  would  be  easy  to  fill  volumes  with  quotations  from  Brit- 


♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  519- 
Ibid,  p.  518. 


WORKINGMEN   AND   WAGES  44; 

ish  writers  containing  admissions  that  the  struggle  for  the 
cheap  loaf  has  brought  in  its  train  evils  which  threaten 
the  national  existence.  Some  of  these  drawbacks  have 
been  discussed  elsewhere,  but  here  we  are  concerned  par- 
ticularly with  that  phase  of  the  question  which  may  be 
regarded  as  purely  economic,  i.  e.,  whether  English  work- 
ingmen,  as  a  whole,  have  been  benefited  by  a  process  of 
cheapening  which  has  practically  arrested  the  development 
of  British  agriculture  and  forced  large  numbers  of  toilers 
who  might  have  earned  a  living  by  tilling  the  soil  into 
the  towns  to  compete  in  the  already  congested  manufactur- 
ing districts  for  a  chance  to  earn  a  livelihood. 

In  the  preceding  chapter  admissions  of  Rogers  were 
adduced  to  show  that  the  middleman,  whom  he  character- 
izes as  an  evil  and  whose  elimination  by  means  of  trusts 
he  inconsistently  advocated,  was  the  real  beneficiary  of 
the  cheapening  process  because  he  made  no  sacrifice  to 
bring  about  the  result.  This  is  a  view  shared  by  the  author 
of  "Democracy  and  Liberty,"  who  remarks :  "To  those, 
indeed,  who  observe  how  large  a  proportion  of  the  advantage 
of  the  extreme  cheapness  of  articles  goes  simply  to  the 
middleman,  and  not  to  the  consumer,  it  will  appear  very 
doubtful  whether  a  low  corn  duty  would  have  any  per- 
ceptible effect  on  bread."*  In  another  place  Lecky  tells 
us  that  "the  horrible  grinding  of  the  poor  that  takes  place 
under  the  name  of  sweating  is  not  for  the  benefit  of  tlie 
rich  man.  He  buys  his  clothes  or  shirts  at  a  price  which 
should  amply  allow  for  the  proper  payment  of  labor.  It 
is  in  the  struggle  to  provide  clothes  of  extreme  cheapness 
for  the  very  poor  that  these  evils  chiefly  arise."  f 

The  striking  similarity  of  these  observations  to  those 
made  by  Carlyle  during  the  heat  of  the  corn  law  discussion 
will   not  escape  the  attentive   reader.     "Brothers,   we   will 

*Lecky,  Democracy  and  Liberty,  Vol.  II,  p.  465. 
flbid,  Vol.  II,  p.  419- 


448         PROTECTION   AND   PROGRESS 

cease  to  undersell  them,"  said  the  cynic ;  "we  will  be  con- 
tent to  equal  sell  them ;  to  be  happy  selling  equally  with 
them !  I  do  not  see  the  use  of  underselling  them.  Cot- 
ton cloth  is  already  two  pence  a  yard  lower;  and  yet  bare 
backs  were  never  more  numerous  among  us."*  Thus  the 
"sage  of  Chelsea"  brushed  aside  the  sophistries  and  refine- 
ments of  the  economists :  "Were  the  corn  laws  ended 
tomorrow,"  he  said,  "there  is  nothing  yet  ended ;  there 
is  only  room  made  for  all  manner  of  things  beginning.  The 
corn  laws  gone  and  trade  made  free,  it  is  as  good  as  cer- 
tain this  paralysis  of  industry  will  pass  away.  *  *  * 
In  this  of  itself  is  no  salvation.  If  our  trade  in  twenty 
years,  flourishing  as  never  trade  flourished,  could  double  it- 
self, yet  then  also,  by  the  old  hisses  faire  method,  our  pop- 
ulation is  doubled  to."t 

Carlyle  was  not  a  professed  economist.  He  had  a  hearty 
contempt  for  those  who  preached  "the  mammon  gospel  of 
supply  and  demand,  competition,  laissea  faire,  and  devil 
take  the  hindmost,"  which  he  characterized  as  "the  shab- 
biest of  gospels  ever  preached,"  but  he  had  a  way  of  get- 
ting at  the  kernel  of  things  which  was  very  uncomfortable 
for  those  who  tried  to  convince  themselves  and  those  who 
would  listen  to  them  that  the  cheapening  of  production  was 
to  be  the  great  panacea  for  all  woes.  "You  have  produced," 
said  Carlyle ;  "he  that  seeks  your  indictment,  let  him  look 
around.  Millions  of  shirts  and  empty  pairs  of  breeches 
hang  there  in  judgment  against  you.  We  accuse  you  of 
overproducing;  you  are  criminally  guilty  of  producing 
shirts,  breeches,  hats,  shoes  and  commodities  in  a  frightful 
overabundance.  And  now  there  is  a  glut  and  your  opera- 
tives cannot  be  fed."  J 

A  half  a  century  has  rolled  around  since  Carlyle  thus 

♦Carlyle,  Past  and  Present,  p.  219. 
■f-Ibid,  p.  221. 
JIbid,  p.  204. 


WORKINGMEN   AND   WAGES.  449 

expressed  himself;  were  he  alive  today  he  might  point 
to  his  prophecy  and  repeat  his  question:  "What  is  the 
use  of  your  spun  shirts?  They  hang  there  by  the  million 
unsalable;  and  here  by  the  million  are  diligent  bare  backs 
that  can  get  no  hold  of  them.  Shirts  are  useful  for  cov- 
ering human  backs ;  useless  otherwise,  and  unbearable  mock- 
ery otherwise."* 

And  yet  during  this  period  how  vastly  more  cheap  have 
things  become  than  when  Carlyle  wrote.  But  what  has 
the  world  gained  on  the  whole?  Giffen  tells  us  that  sta- 
tistics prove  that  more  people  than  formerly  are  able  to 
get  shirts,  but  he  does  not  conceal  the  fact  that  the  num- 
ber of  bare  backs  is  on  the  increase.  Indeed,  the  growth 
of  the  shirtless  element  has  impressed  him  so  strongly  that 
he  has  ingeniously  constructed  a  new  society  out  of  its  mem- 
bers which  he  suggests  must  be  kept  without  the  pale  of 
that  section  which  is  lucky  enough  to  get  shirts. 

Why  the  preachers  of  the  shabby  gospel  of  Cobdenism 
should  have  imagined  that  cheapness  could  better  the  con- 
dition of  mankind  passes  comprehension.  A  knowledge  of 
the  results  of  an  incomparably  greater  cheapness  in  the 
Orient  than  Western  peoples  are  capable  of  conceiving 
must  have  warned  them  that  squalor  and  want  may  easily 
be  its  accompaniment.  The  experience  of  India  and  China 
was  theirs  to  draw  upon.  They  could  also  look  across 
the  English  channel  and  see  the  wretched  condition  of  the 
working  people  in  countries  where  the  cost  of  living  was 
infinitely  lower  than  in  England ;  yet  they  refused  to  heed 
these  examples  and  rashly  assumed  that  they  could  over- 
come the  evil  effects  of  a  system  which,  followed  to  its 
logical  conclusion,  inevitably  tends  to  the  degradation  of 
the  workingman.  They  would  not  see  that  attempts  to  ben- 
efit the  producing  consumer  by  reducing  the  profits  of  the 
producer  and  the  wages  of  those  who  assist  him  in  produc- 
ing is  as   senseless  a  proceeding,  regarded  as  a  remedy 

♦Carlyle,  Past  and  Present,  p.  25. 
29 


450         PROTECTION  AND   PROGRESS 

for  economic  distress,  as  it  would  be  for  a  starving  man  to 
try  to  sustain  himself  by  devouring  his  own  flesh. 

"It  must  never  be  forgotten,"  says  a  modern  free  trader, 
"that  the  mass  of  producers  form  also  the  mass  of  con- 
sumers, and  to  benefit  producers  generally  at  the  expense 
of  consumers  generally  is  like  transferring  money  from  one 
pocket  to  another  and  dropping  some  of  it  in  the  process. 
The  best  illustration  of  this  growth  of  monopoly  by  imi- 
tation is  afforded  by  protective  duties.  One  duty  leads 
to  another  until  all  industries  are  protected,  with  the  result 
that  the  real  productive  powers  of  the  society  are  lessened."* 

It  is  by  means  of  such  generalizations  as  these  that 
men  who  aim  at  the  truth  manage  to  deceive  themselves. 
We  have  already  seen  from  the  testimony  of  Rogers  and 
others  that  the  unnecessary  middleman,  and  the  capitalist 
who  lives  on  his  unearned  increment,  constitute  as  import- 
ant a  part  of  society  as  the  true  producer.  The  author 
quoted  also  dwells  upon  the  unnecessary  multiplication  of 
middlemen  and  the  existence  of  a  large  class  who  "neither 
toil  nor  spin,"  but  when  he  begins  to  generalize  he  for- 
gets them  and  teaches  that  the  producer  and  his  working- 
men  are  robbing  themselves  when  they  succeed  in  increasing 
their  profits  and  wages  at  the  expense  of  the  non-producing 
consumer.  It  is  by  means  of  this  process  of  self-decep- 
tion that  English  Cobdenites  render  themselves  unfit  to 
pronounce  upon  the  workings  of  a  properly  constructed 
protective  tariff,  and  fail  to  see  that  it  operates  almost 
wholly  in  the  interest  of  the  classes  who  are  compelled  to 
toil  productively  to  earn  a  livelihood. 

It  is  possible  that  at  some  time  a  free  trader  has  seen 
and  admitted  the  fact  that  the  protective  tariff  of  the  United 
States  is  laid  on  a  large  number  of  articles  which  are  strictly 
in  the  category  of  luxuries ;  if  so,  the  admission  has  never 
come  under  the  observation  of  the  writer.     On  the  con- 

*Nicholson's  Principles  of  Political  Economy,  Vol.  II,  p.  71. 


WORKINGMEN   AND   WAGES.  451 

trary,  he  has  discovered  that  Cobdenites  invariably  assume 
that  the  effect  of  protection  is  to  raise  the  cost  of  the  articles 
produced  within  the  area  of  a  protected  country  to  the  work- 
ing consumer.  That  there  is  no  ground  for  such  an  assump- 
tion a  moderate  familiarity  with  the  operation  of  the  Amer- 
ican tariff  will  permit  anyone  to  assert  with  positiveness. 
Its  schedules  are  filled  with  duties  on  articles  rarely  con- 
sumed by  the  working  classes.  Among  them  may  be  enu- 
merated the  finer  grades  of  woolen  goods,  silks,  satins,  vel- 
vets, fine  tobaccos,  perfumes,  brie  a  brae,  laces  and  em- 
broideries, fine  wines  and  liquors,  plate  glass,  costly  mir- 
rors, fine  clothing,  high  grade  crockery,  fine  leathers  and 
leather  goods,  gloves,  and  hundreds  of  other  things  with 
which  the  worker  has  no  more  acquaintance  than  that  de- 
rived from  seeing  them  exhibited  in  the  show  windows  of 
5hops. 

Now  it  is  obvious  that  the  imposition  of  these  duties 
results  in  what  Professor  Nicholson  describes  as  "a  trans- 
ference of  money  from  one  pocket  to  another,"  but  the 
pockets  are  not,  as  he  assumes,  in  the  clothes  of  the  same 

person.  If  the  duty  on  gloves  makes  the  cost  of  those 
articles  two  dollars  a  pair,  the  workingman  whose  family 
never  wear  high  grade  gloves  is  not  affected  by  the  high 
price.  The  imposition  of  a  heavy  tariff  on  champagne  does 
not  concern  any  other  class  of  consumers  than  the  rich 
able  to  afford  such  luxuries.  So,  too,  with  high  grade 
woolen  goods ;  it  cannot  matter  to  the  workingman  whether 
the  wearer  of  clothes  made  from  them  pays  twenty  dollars 
a  suit  or  sixty  dollars.  The  productive  worker  in  the 
United  States  who  sits  down  to  his  abundant  meal,  served 
on  modest  stoneware  which  figures  as  semi-porcelain,  would 
be  surprised  if  you  attempted  to  tell  him  that  he  was  injured 
by  a  tariff  imposed  on  so-called  art  china  which  helps  to 
make  a  single  plate  of  a  dinner  service  cost  more  than  all 
the  crockery  consumed  by  his  household.  He  would  be 
amazed  if  a  sensible  man  were  to  seriously  inform  him' 


452  PROTECTION  AND  PROGRESS 

that  he  was  a  sufferer  because  the  cost  to  the  consumer 
of  the  infinite  variety  of  articles  of  bijoutry,  which  are  never 
seen  in  the  homes  of  the  best  paid  workingmen,  was  en- 
hanced by  the  tariff.  More  than  this ;  if  he  were  an  in- 
teUigent  American  workingman  he  would  probably  retort 
that  instead  of  being  injured  by  the  duty  he  was  benefited, 
for  its  imposition  called  into  existence  manufactories  which, 
by  increasing  the  opportunities  for  employment,  helped 
to  maintain  the  scale  of  wages  he  was  enjoying  and  gave 
him  some  assurance  that  when  his  growing  family  reached 
the  age  when  its  members  would  also  require  work  there 
would  be  a  chance  to  get  it  which  would  not  exist  if  the 
country  he  lived  in  refrained  from  attempts  at  the  diversi- 
fication of  industry. 

It  would  be  impossible  to  actually  determine  what  pro- 
portion of  protected  articles  in  the  United  States  come  in 
the  category  of  luxuries,  but  it  is  the  major  part.  What- 
ever may  have  been  the  case  in  the  past,  it  is  impossible 
now  for  anyone  to  assert  that  the  cost  to  American  con- 
sumers of  the  great  staples  is  affected  by  the  operation  of 
the  tariff.  It  would  be  manifestly  absurd  to  assume  that 
the  cost  of  iron  in  this  country  is  increased  by  the  tariff 
in  the  face  of  the  fact  that  the  price  level  is  lower  here 
than  in  Great  Britain.  Equally  idle  would  it  be  to  say 
that  the  commoner  classes  of  cotton  goods,  such  as  sheet- 
ings, drillings  and  calicoes,  are  made  dearer  on  account  of 
the  duties ;  the  factory  price  lists  and  growing  exports 
to  other  countries,  despite  sharp  competition,  show  that 
this  is  impossible  and  that  Americans  are  actually  enjoy- 
ing lower  prices  for  commodities  of  this  kind  than  most 
other  peoples.  The  same  thing  is  true  of  the  class  of  woolen 
goods  worn  by  the  majority  of  the  American  people.  The 
effect  of  the  tariff  has  not  been,  as  Cobdenites  assumed  it 
would  be,  to  make  the  products  of  the  American  mills  work- 
ing up  the  wool  from  our  vast  flocks  as  much  dearer  as  the 
added  duty.     On  the  contrary,  the  internal  production  and 


WORKINGMEN    AND   WAGES  453 

competition  have  been  important  factors  in  regulating  prices, 
and  they  have  resulted  in  giving  Americans  of  the  work- 
ing classes  relatively  cheaper  clothes  than  foreigners  in  the 
same  condition  of  life  enjoy,  else  how  can  the  fact  be  ex- 
plained that  the  masses  in  Europe  are  arrayed  in  garments 
which  most  American  workers  would  refuse  to  wear  because 
their  poor  quality  and  lack  of  finish  and  poor  workmanship 
would  not  meet  their  requirements? 

There  is  no  intention  on  the  part  of  the  writer  to  con- 
vey the  impression  that  the  United  States  is  a  cheap  coun- 
try, for  it  is  not.  In  pointing  out  that  the  great  staples 
consumed  by  the  masses  are  cheap  we  have  no  other  object 
than  to  make  clear  the  fact  that  it  is  possible  for  the  Amer- 
ican workingman,  if  he  cares  to  subject  himself  to  the  same 
rule  of  conduct  which  obtains  among  his  fellows  in  Europe, 
to  live  much  more  cheaply  than  they  do.  The  distinction 
we  desire  to  make  is  one  which  forcibly  struck  Matthew 
Arnold  in  discussing  "Civilization  in  America,"  namely, 
that  the  United  States  is  a  dear  country  for  the  rich  and 
a  cheap  country  for  the  toilers.  In  an  article  widely  pub- 
lished Professor  Arnold,  taking  certain  strictures  of  Sir 
Lepel  Griffin  for  his  text,  after  presenting  a  picture  of  the 
conveniences  which  an  Englishman  could  command  much 
more  cheaply  than  Americans,  went  on  to  say: 

"Probably  Sir  Lepel  Griffin  had  this  notion  of  the  com- 
forts and  conveniences  of  life  much  in  his  thought  when 
he  reproached  American  civilization  with  its  shortcomings. 
For  men  of  this  kind  and  for  all  that  large  number  of  men 
so  prominent  in  this  country,  and  who  make  their  voices 
so  much  heard,  men  who  have  been  at  the  public  schools 
and  universities,  men  of  the  professional  and  official  class, 
men  who  do  the  most  part  of  our  literature  and  journalism, 
America  is  not  a  comfortable  place  to  abide.  A  man  of  this 
sort  has  in  England  everything  in  his  favor;  society  ap- 
pears organized  especially  for  his  advantage.  A  Roth- 
schild or  a  Vanderbilt  can  buy  his  way  anywhere  and  can 


454        PROTECTION  AND  PROGRESS 

have  what  comforts  or  luxuries  he  likes  whether  in  Amer- 
ica or  England.  But  it  is  in  England  than  an  income  of 
from  three  or  four  to  fourteen  or  fifteen  hundred  a  year 
does  so  much  for  its  possessor,  enables  him  to  live  with  so 
many  of  the  conveniences  of  far  richer  people.  For  his 
benefit  alone  all  clubs  are  organized  and  hansom  cabs  ply; 
service  is  abundant,  porters  stand  waiting  at  the  railway 
stations.  In  America  all  luxuries  are  dear  except  oyster 
and  ice;  service  is,  in  general,  scarce  and  bad;  a  club  is 
a  most  expensive  luxury;  the  cab  rates  are  prohibitive — 
more  than  half  of  the  people  who  in  England  would  use  caljs 
must  in  America  use  the  horse  cars,  the  tram.  The  charges 
©f  tailors  and  mercers  are  about  one-third  higher  than  they 
are  with  us.  I  mention  only  a  few  striking  points  as  to 
which  there  can  be  no  dispute  and  in  which  a  man  of  Sir 
Lepel  Griffin's  class  would  feel  the  great  difference  between 
England  and  the  United  States." 

Having  thus  pointed  out  who  were  the  real  beneficiaries 
of  cheapness  in  England,  Professor  Arnold  proceeded  to 
institute  a  comparison  between  the  conditions  of  the  work- 
ers in  this  country  and  in  England  in  which  he  eulogized 
the  sturdy  independence  of  the  American  worker  who  held 
up  his  heaH  and  felt  that  he  was  a  man  among  men,  con- 
trasting him  with  the  English  toiler,  whose  lot  was  infi- 
nitely harder  and  whose  mode  of  life  was  sordid  compared 
with  that  of  the  man  who  earned  his  livelihood  in  the  United 
States.  Professor  Rogers,  who  preached  the  gospel  of 
cheapness  almost  unceasingly,  also  bore  testimony  to  the 
truth  of  Arnold's  assertion  in  a  lecture  in  which  he  dis- 
cussed the  subject  of  emigration  to  the  United  States,  say- 
ing: "You  never  see  a  servile  American  and  rarely  meet 
one  who  is  insolent."*  It  is  true  the  distinguished  Cob- 
denite  had  a  theory  to  account  for  this  remarkable  differ- 
ence between  the  toilers  of  the  two  countries,  but  his  infer- 
ence was  absolutely  unsupported  by  facts,  as  we  shall  see 

*Rogers,  Economic  Interpretation  of  History,  p.  282. 


WORKINGMEN    AND   WAGES  455 

later  on  when  we  inquire  what  effect  on  the  material  pros- 
perity of  the  American  workingman  was  produced  by  the 
abundance  of  land  in  the  United  States.  We  are  simply 
dealing  here  with  his  admission  that  the  workingmen  in 
a  country  of  high  protection,  in  which  nominal  dearness 
prevailed,  were  so  well  contented  with  their  position  in 
life  that  they  could  deport  themselves  in  a  fashion  calcu- 
lated to  favorably  impress  itself  on  the  mind  o  fan  observ- 
ing man  who  lived  in  a  country  of  free  institutions  where 
the  toiler  as  a  rule  carries  himself  either  servilely  or  inso- 
lently. 

.  Arnold  and  Rogers  voiced  their  opinions  on  this  phase 
of  the  subject  twelve  or  fifteen  years  ago.  A  prominent 
Englishman,  Professor  Lecky,  who  delivered  himself  more 
recently,  has  found  little  change  since  they  wrote.  He  says : 
"Although  America  has  experienced  many  periods  of  acute 
commercial  crisis  and  depression,  the  general  level  of  her 
well  being  has  been  unusually  high.  Property  from  the 
first  has  been  very  widely  diffused.  Her  lower  levels  in 
their  standard  of  comfort  more  nearly  resemble  the  middle 
than  the  lowest  class  in  European  countries."* 

Now  what  is  the  cause  of  this  striking  feature  in  Amer- 
ican life  which  these  three  competent  critics  single  out  and 
dwell  upon?  Rogers  satisfied  himself  that  it  is  due  to 
the  ability  of  the  American  workingmen  to  relieve  the  press- 
ure of  competition  by  going  onto  vacant  land,  an  opinion 
which  was  shared  by  both  Arnold  and  Lecky,  although  the 
latter  had  a  glimmering  of  the  true  reason,  as  we  will  infer 
from  this  paragraph  from  "Democracy  and  Liberty": 
"There  is  undoubtedly  some  truth  in  the  doctrine  which  is 
now  much  taught  that  a  rise  in  the  habitual  standard  of 
comfort  among  the  working  classes  is  not  only  the  conse- 
quence, but  also  in  some  degree  a  cause  of  higher  wages. 
This  is  especially  the  case  when  it  is  gradual,  normal  and 
general."! 

*Lecky,  Democracy  and  Liberty,  Vol.  I,  p.  68. 
flbid,  Vol.  II,  p.  435. 


456        PROTECTION  AND  PROGRESS 

Professor  Lecky  is  wrong  in  assuming,  as  he  evidently 
does,  that  the  doctrine  he  speaks  of  is  a  new  one.  If  he 
will  read  Smith's  "Wealth  of  nations"  attentively  he  will 
see  that  it  was  tolerably  well  defined  by  the  learned  Doc- 
tor, who  taught  in  the  most  unmistakable  fashion  that  the 
laborer  was  constantly  being  pressed  to  the  subsistence  level. 
The  whole  theory  of  free  trade  revolves  around  this  idea. 
If  any  one  doubts  it  let  him  study  the  import  of  this  emd 
similar  passages  from  Smith:  "The  advanced  price  (caused 
by  taxation)  of  such  manufactures  as  are  real  necessaries 
of  life,  and  are  destined  for  the  consumption  of  the  poor, 
of  coarse  woolens,  for  example,  must  be  compensated  to 
the  poor  by  a  further  advancement  of  their  wages.  The 
middling  and  superior  ranks  of  people,  if  they  understood 
their  own  interest,  ought  always  to  oppose  all  taxes  on 
the  necessaries  of  life,  as  well  as  all  direct  taxes  upon 
wages  of  labor.  The  final  payment  of  both  one  and  the 
other  falls  altogether  upon  themselves,  and  always  with  a 
considerable  overcharge."*  In  the  same  connection  Smith 
further  says:  "Taxes  upon  luxuries  have  no  tendency  to 
raise  the  price  of  any  other  commodities  except  that  of 
the  commodities  taxed." 

Here  we  have  the  economic  idea  of  the  laissez  faire 
school  put  into  the  space  of  a  nutshell.  No  matter  what 
irrelevant  stufif  may  be  written  about  the  benfits  of  cheap- 
ness it  cannot  conceal  this  cardinal  belief  that  free  com- 
petition among  the  working  classes  must  necessarily  bring 
all  the  competitors  down  to  the  level  of  brutes,  where  the 
struggle  is  merely  one  for  existence.  No  other  meaning 
can  be  attached  to  Smith's  language,  and  to  his  utterly 
heartless  suggestion  that  "the  middling  and  superior  ranks 
of  people"  should  always  take  care  to  avoid  taxing  the 
necessaries  of  the  working  classes,  but  should  instead  single 
out  their  luxuries.     This  has  been  the  steadfast  purpose  of 


♦Smith,  Wealth  of  Nations,  Bk.   s.  Chap.   II. 


WORKINGMEN   AND   WAGES  457 

the  Cobdenites.  The  history  of  English  taxation,  and  its 
incidence  since  1848,  shows  that  they  have  not  missed  the 
hint,  for  the  masses,  who  in  Great  Britain  enjoy  less  than 
a  tenth  of  the  total  revenues  from  trade  and  all  other  sources, 
are  called  upon  to  pay  over  one-half  of  the  taxes  for  the 
support  of  the  general  government.  Adam  Smith  tells  us 
that  the  effect  of  competition  has  been  to  make  men  nar- 
row and  selfish,  and  refers  to  the  destruction  of  the  spirit 
of  hospitality  which  it  has  brought  in  its  train.  He  might 
have  completed  his  indictment  by  charging  that  it  taught 
men  to  be  inhuman,  for  certainly  no  more  cunning  scheme 
of  keeping  men  in  perpetual  slavery  could  be  devised  than 
the  one  which  deliberately  seeks  to  throw  the  burden  of 
taxation  on  those  least  able  to  bear  it. 

That  the  attempt  to  completely  enslave  the  masses  proved 
unsuccessful  in  England  is  wholly  due  to  the  fact  that  the 
workers  banded  in  self-defense,  and,  by  means  of  unions, 
completely  nullified  the  law  which  Smith  saw  would  keep 
the  toiler  in  subjection  if  it  were  permitted  to  work  unre- 
strainedly. The  original  free  traders  were  thoroughly  im- 
bued with  the  ideas  of  Smith,  and,  therefore,  consistently 
opposed  the  efforts  of  labor  to  organize.  John  Morley,  in 
his  biography,  quotes  Cobden  as  saying:  "Depend  upon  it, 
nothing  can  be  got  by  fraternizing  with  trades  unions. 
They  are  founded  on  principles  of  brutal  tyranny  and  mo- 
nopoly. I  would  rather  live  under  a  Dey  of  Algiers  than 
a  trades  committee."*  John  Bright,  who  saw  danger  in 
the  attempt  to  rescue  children  from  the  horrors  of  the  fac- 
tory system  and  unweariedly  opposed  the  English  factories 
acts,  as  late  as  1888,  writing  to  an  American,  said :  "Whilst 
your  tariff  is  in  force  you  need  not  expect  your  workmen 
to  be  wise.  Protection,  which  means  robbing  somebody, 
will  not  content  itself  with  enriching  manufacturers,  but 
will  be  called  in  to  give  higher  wages  and  shorter  hours 
of  labor  to  your  workmen."*  Later  free  traders,  conspicuous 

*Morley,  Life  of  Cobden. 


458       PROTECTION  AND  PROGRESS 

among  them  J.  Thorold  Rogers,  have  accepted  the  situation 
and  have  ceased  to  struggle  against  the  inevitable. 

But  the  recognition  of  the  fact  that  such  arguments  as 
John  Bright  employed  are  not  tenable  in  a  country  where 
the  workingmen  enjoy  the  franchise  has  not  prevented  free 
traders  making  themselves  ridiculous  by  advancing  theories 
and  giving  advice  wholly  inconsistent  with  the  doctrine  of 
laisses  faire.  Rogers  says:  "The  evidence  of  the  pres- 
ent and  the  example  of  the  past  appear  to  prove  that  labor 
partnerships  are  the  remedy  for  low  wages"  ;*  but  to  the 
last  moment  of  his  life  he  advocated  the  utmost  freedom 
of  trade.  Now,  it  should  have  been  clear  to  any  reflecting 
man  that  a  combination  for  the  purpose  of  maintaining  a 
wage  rate  could  only  be  effective  so  long  as  competition 
was  restrained  within  the  area  in  which  the  agreement  oper- 
ated. If  the  English  silk  spinners  and  weavers  agreed 
among  themselves  to  keep  up  their  scale  of  wages  only 
one  result  could  follow  their  action  if  manufacturers  in 
France  or  other  countries  where  labor  could  be  obtained 
on  cheaper  terms  were  permitted  to  freely  introduce  their 
products  into  England.  That  result  would  necessarily  be 
the  closing  up  of  the  English  silk  spinning  and  weaving 
factories,  for  those  who  conducted  them  would  not  do  so 
indefinitely  at  a  loss. 

In  the  heydey  of  Cobdenism  the  advocates  of  latssez 
faire  jauntily  declared  that  this  was  as  it  should  be.  "If," 
they  said,  "the  English  workingman  cannot  produce  a  cer- 
tain article  as  cheaply  as  his  French  competitor  he  should 
retire  from  the  contest."  For  awhile  this  view  appeared 
to  meet  with  universal  favor  throughout  Great  Britain. 
Those  entertaining  it  were  deluded  by  the  economists,  who 
loosely  taught  that  the  extinction  of  a  single  industry  was 
of  no  consequence  and  should  not  be  taken  into  consider- 
ation if  in  its  place  other  industries  were  created  for  which 
the  people  were  better  fitted  and  which  would  enlarge  the 

♦Bright,  John,  Letter  to  L.  M.  Reavis,  of  St.  Louis,  Mo,,  Feb.  6. 
1888. 


WORKINGMEN   AND   WAGES  459 

avenues  of  employment  while  increasing  the  national  wealth. 
But  the  vital  error  of  this  method  of  teaching  was  that  it 
ignored  the  fact  that  there  were  no  industries  practiced 
by  Englishmen  which  they  were  better  fitted  to  pursue  than 
other  peoples.  The  failure  to  perceive  this  blinded  many 
who  accepted  the  doctrines  of  the  Manchester  school  to 
the  danger  that  the  loss  of  industries  might  finally  become 
so  great  as  to  imperil  the  national  welfare. 

We  have  seen  that  the  investigators  of  the  repeal  of 
the  corn  laws  at  first  entertained  the  belief  that  English 
agriculture  was  impregnable.  Later,  when  they  discovered 
that  the  natural  protection  upon  which  they  had  relied  was 
broken  down  by  the  vast  improvement  in  transportation 
facilities,  they  shifted  their  position  and  declared  that  while 
the  individual  landlord  and  his  tenant  farmer  and  many 
farm  laborers  had  been  injured,  the  gain  of  national  wealth 
was  so  great  that  it  would  be  irrational  to  count  the  losses 
of  a  class  as  a  sacrifice.  In  the  same  way,  when  it  was 
pointed  out  that  the  silk  spinners  and  weavers  of  England 
were  being  driven  to  the  wall  by  continental  rivals,  the  answer 
came  promptly  that  the  sufferings  of  the  displaced  employes 
were  regrettable,  but  that  they  were  more  than  balanced 
by  the  opportunities  to  obtain  employment  which  the  ex- 
pansion of  British  industry  in  other  directions  afforded. 

But  there  has  been  a  decided  revision  of  opinion  on  this 
point  in  England  in  recent  years.  The  optimistic  view 
predicated  upon  the  fact  that  English  wages  were  higher 
because  the  British  worker  was  superior  to  his  rivals  has 
largely  disappeared,  and  it  is  now  beginning  to  be  seen 
that  this  was  due,  not  to  the  cause  assigned,  but,  as  has 
been  shown  at  length  elsewhere  in  these  pages,  to  the  en- 
joyment of  a  practical  monopoly  of  production  in  many 
lines  by  the  British,  whose  rivals  were  not  enterprising 
enough  to  enter  the  manufacturing  lists  with  them.  So 
long  as  the  lethargy  of  the  countries  now  actively  compet- 
ing with  the  British  lasted  the  manufacturers  of  Great  Brit- 


46o  PROTECTION  AND  PROGRESS 

ain  made  enormous  profits,  and  these  they  were,  through 
the  instrumentality  of  the  labor  organizations,  compelled 
to  share  to  a  greater  or  less  extent  with  their  operatives. 

As  soon,  however,  as  rivalry  began  to  have  full  play 
the  conditions  changed.  When  Belgium,  Germany  and 
other  countries  began  to  excel  in  the  fields  in  which  the 
English  once  thought  themselves  pre-eminent  the  British 
worker  woke  up  to  the  fact  that  there  was  a  law  affecting 
wages  as  unfailing  in  its  operation  as  that  which  makes 
water  find  its  level.  They  soon  discovered  that  there  was 
some  connection  existing  between  the  cheapness  of  Bel- 
gian and  German  products  and  the  low  wages  and  long 
hours  of  labor  in  that  country.  It  was  not  long  after  this 
discovery  that  practical  Englishmen  cast  to  the  winds  as 
idle  tales  those  statements  which  made  out  the  French,  the 
German  and  the  Belgian  workmen  to  be  fellows  whom 
no  British  toiler  need  fear.  The  fine  spun  deductions  from 
Brassey's  estimate  of  the  relative  superiority  of  the  Eng- 
lish navvy,  who  was  oftener  an  Irishman  than  an  English- 
man, were  dismissed,  and  instead  the  view  that  no  rival 
in  the  field  of  industry  was  to  be  despised  has  taken  its 
place.  Spencer  and  other  theorists  who  built  up  an  airy 
fabric  of  British  labor  efficiency  are  now  out  of  fashion, . 
and  it  is  the  custom  for  the  visiting  delegations  and  commis- 
sions, after  their  return  to  England  from  other  countries, 
to  tell  their  countrymen  that  they  are  backward  and  that 
they  must,  in  order  to  win  in  the  industrial  race,  put  them- 
selves abreast  of  the  more  progressive  peoples. 

These  latter  recommendations  are  often  obscured  by 
the  assumption  that  the  cause  of  the  relative  stagnation 
of  British  manufacturing  industry  is  due  to  the  lack  of 
enterprise  of  the  owners  of'  plants,  who  are  unwilling  to 
adapt  themselves  to  changing  conditions  by  promptly  adopt- 
ing improved  machinery,  but  the  trades  unionists  stead- 
fastly refuse  to  accept  this  view  except  under  compulsion. 
Their  opinion  is  that  the  English  workingman  is  at  a  dis- 


WORKINGMEN   AND   WAGES  461 

advantage  with  his  foreign  competitor  because  the  latter, 
either  from  force  of  circumstances  or  choice,  works  longer 
hours  and  for  less  wages. 

Hence  the  movement  for  internationalism  in  trades  union- 
ism. Committees  are  now  sent  to  the  continent  by  the 
English  trades  unions  to  impress  on  their  fellow  workers 
in  other  countries  the  necessity  of  abridging  their  hours  of 
labor  and  of  compelling  their  employers  to  pay  higher  wages. 
But  missionary  work  of  this  kind  has  little  or  no  effect,  be- 
cause the  people  to  whom  the  argument  is  addressed  see 
that  the  whole  matter  under  present  conditions  resolves 
itself  into  a  struggle  for  existence  and  are  naturally  reluc- 
tant to  adopt  a  course  which,  according  to  the  belief  of  the 
men  who  are  endeavoring  to  persuade  them,  would  result 
in  making  competition  with  England  more  difficult,  or,  to 
put  it  in  another  way,  the  continental  workmen  fear  that 
the  attempt  to  put  themselves  on  the  same  plane  as  the 
British  would  result  in  depriving  them  of  the  opportunity 
to  earn  anything  at  all.  In  short,  they  are  imbued  with 
the  idea  that  a  half  a  loaf  is  better  than  no  loaf  at  all,  and 
they  are  not  likely  to  surrender  it  so  long  as  they  are  con- 
fronted with  the  spectacle  of  nations  quarreling  over  oppor- 
tunities to  extend  their  trade,  a  state  of  affairs  which 
makes  the  Cobdenistic  theory  of  the  illimitability  of  the 
world's  markets  appear  too  ridiculous  for  sensible  men  to 
give  it  much  further  thought. 

The  English  appear  to  be  unconscious  of  the  real  trend 
of  trades  unionism,  or  they  would  not  fall  into  so  many 
contradictions  in  discussing  it ;  nor  would  they  entertain  the 
hope,  as  Rogers  did,  that  it  will  finally  satisfactorily  work 
out  the  true  economic  problem  of  giving  the  producer  a 
fair  share  in  the  game  of  life.  That  it  never  can  bring 
about  such  a  result  while  unrestrained  competition  prevails 
has  long  since  been  perceived  by  many  of  the  brighter  minds 
who  are  shaping  the  destinies  of  the  order  to  which  they 
belong.    The  Parliamentary  Committee  of  the  .Trades  Union 


462        PROTECTION   AND   PROGRESS 

Congress  which  met  in  England  in  1888  voiced  the  sentiment 
which  is  becoming  more  and  more  general  in  that  country 
when  it  declared  that :  "The  demon  of  cheapness  has  per- 
meated our  whole  social  system,  and  while  the  cheapness  of 
goods  has  been  a  matter  for  wonder,  purchasers  seldom  or 
never  give  a  thought  to  the  human  blood  and  muscle  that 
have  been  ground  up  in  the  production  of  the  article." 

That  men  who  entertain  and  promulgate  sentiments  of 
this  character  can  be  permanently  attached  to  the  laissez 
faire  policy  by  the  bait  of  the  cheap  loaf  seems  incredible; 
that  they  still  adhere  to  it  is,  however,  a  fact.  How  long 
they  will  continue  to  do  so  is  problematical.  The  manufac- 
turers and  the  trades  unionists  of  England  have  just  passed 
through  a  conflict  which  threw  into  plain  relief  some  of  the 
difficulties  that  confront  employer  and  employed  in  that 
country.  On  the  one  side  it  was  contended  that  the  struggle 
was  for  a  living  wage ;  on  the  other  it  was  plainly  asserted 
that  the  question  resolved  itself  down  to  this  simple  propo- 
sition :  Unless  labor  makes  concessions  the  English  manufac- 
turer will  be  compelled  to  abandon  competition  and  sur- 
render to  foreign  rivals.  Reduced  to  its  lowest  terms,  the 
contest  was,  therefore,  one  between  a  living  wage  and  an 
offer  of  a  half  loaf,  the  tender  of  the  latter  being  accompanied 
by  the  significant  intimation  that  "half  a  loaf  is  better  than 
no  loaf  at  all." 

That  this  condition  of  affairs  has  been  brought  about 
by  unrestrained  competition  no  one  can  very  well  deny 
without  contradicting  all  the  evidence  of  history.  Had  not 
England  unduly  stimulated  the  development  of  her  resources 
she  would  not  today  be  in  the  position  of  an  overpopulated 
land.  Had  she,  instead  of  pursuing  the  wasteful  policy  of 
bringing  raw  materials  from  her  remote  colonies  to  fashion 
them  into  articles  for  consumption  at  home,  encouraged  the 
establishment  of  manufactories  throughout  her  entire  empire 
there  would  be  a  different  story  to  tell  to-day.  Had  the 
draft  upon  the  resources  of  the  British  Isles  been  merely 


WORKINGMEN   AND   WAGES  463 

normal  her  scientists  and  practical  men  would  not  be  dis- 
cussing the  question  of  the  exhaustion  of  her  fuel  supplies 
in  the  near  future.  In  short,  had  it  been  the  policy  oi 
England  to  not  only  permit  but  to  actively  encourage  the 
uniform  development  of  the  territory  of  the  peoples  she 
dominated,  instead  of  seeking  to  divert  the  stream  of  wealth 
into  one  little  island,  there  might  have  been  a  really  great 
British  Empire  to-day,  and  not  the  precarious  political  fiction 
which  that  name  now  stands  for. 

Professor  Rogers,  whose  devotion  to  laissez  faire  ought 
to  be  beyond  suspicion,  tells  us  that  "it  is  a  matter  of  great 
gravity  whether  we  (the  English)  should  welcome  or  even 
permit  the  perpetual  immigration  of  a  foreign  element  into 
the  country,"  and  he  adds :  " Workingmen,  who  understand 
the  interest  of  their  order,  are  alive  to  the  risk  which  their 
organizations  run  from  the  competition  of  foreign  immi- 
grants, and,  with  characteristic  public  spirit,  have  suggested 
to  foreign  labor  that  it  should  seek  to  raise  itself,  not  at  the 
expense  of  other  laborers,  but  in  concert  with  other 
laborers."*  The  suggestion  referred  to  may  have  been 
spirited,  but  it  was  nevertheless  foolish,  because  men  pursued 
by  want  and  hunger  are  not  amenable  to  advice  of  this 
character.  Crediting  the  English  workingman  with  the 
average  share  of  disinterestedness,  or  rather  lack  of  it,  we 
have  a  right  to  assume  that  when  the  British  trades  unionists 
told  the  foreigners  that  they  had  better  stay  in  their  own 
countries  and  try  to  lift  themselves  up  they  were  more 
actuated  by  selfish  fear  of  near  at  hand  competition  than  by 
any  hope  or  desire  to  see  their  rivals  profit  by  their  advice. 

At  any  rate,  it  was  grotesquely  out  of  place  for  English- 
men who  advocate  the  doctrine  of  unlimited  competition 
to  suggest  that  possible  rivals  should  practice  self-abnega- 
tion and  refuse  to  compete  with  them;  moreover,  it  was 
foolish,  for,  as  Mr.  Broadhurst,  the  labor  agitator,  remarked 


♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  $66. 


464        PROTECTION   AND   PROGRESS 

at  the  Paris  conference  in  1883:  "You  cannot  escape,  try 
whatever  you  can,  from  the  influence  of  competition  any 
more  than  from  the  survival  of  the  fittest."  Rogers,  who, 
as  a  free  trader,  advocated  competition,  shrinks  from  this 
naked  presentation  of  its  effects  and  says  "it  is  possible 
that  the  struggle  for  existence,  unless  controlled  and  elevated, 
may  be  the  degradation  of  all."  True  enough,  but  it  is 
extraordinary  that  so  profound  a  student  failed  to  see  that 
his  doctrine  of  cheapness  demands  universal  degradation. 

The  feeble  expedient  of  the  English  to  relieve  the  con- 
sequences of  overpopulation,  which  takes  the  form  of  pro- 
moting emigration,  must  prove  unavailing  so  long  as  the 
doors  are  left  open  for  the  introduction  of  the  products  of 
the  cheaper  labor  of  other  countries.  What  can  it  avail  the 
English  worker  if  the  foreign  pauper  immigrant  is  excluded, 
and  the  products  of  foreign  pauper  labor  are  freely  intro- 
duced into  England  to  compete  with  and  drive  out  the 
products  of  British  workers?  What  gain  can  result  to  the 
English  worker  from  the  exclusion  of  foreigners  while  they 
permit  the  owners  of  capital  to  transfer  it  to  the  countries 
in  which  cheap  labor  abounds  for  the  purpose  of  utilizing  it 
in  the  manufacture  of  goods  to  be  freely  imported  into  the 
United  Kingdom  for  British  consumption? 

The  extent  to  which  this  practice  has  already  been 
carried  ought  long  since  to  have  warned  the  English  work- 
ingman  that  attempts  to  prohibit  pauper  immigration  into 
England  and  to  promote  pauper  emigration  to  other  coun- 
tries— for  it  is  one  of  the  inconsistencies  of  free  traders  of 
the  Rogers  school  that  they  condemn  other  people  for  seek- 
ing their  country  while  they  encourage  the  poverty  stricken 
of  their  own  land  to  flee  to  other  parts  of  the  world — must 
prove  ineffective  remedies  for  their  grievances.  Proposi- 
tions to  restrict  immigration  and  promote  emigration  are 
not  made  in  the  interest  of  the  British  working  classes. 
They  are  advocated  on  behalf  of  the  non-producing  classes, 
who  wish  to  preserve  for  themselves  the  doubtful  boon  of 


WORKINGMEN    AND   WAGES  465 

cheapness.  The  sentiments  of  these  are  echoed  by  the  gov- 
erning class,  who  see  that  the  abnormal  growth  of  population 
in  the  British  Isles  constitutes  a  menace  recognized  by  all 
military  critics  as  one  that  may  prove  destructive  to  the 
perpetuity  of  the  empire. 

No  matter  in  what  aspect  we  consider  the  fortunes  of 
English  workingmen  we  are  forced  to  conclude  that  the 
outlook  is  not  favorable  for  them.  The  remedy  for  their 
ills  which  Rogers  recommends,  trades  unionism,  is  more 
likely  to  convert  them  into  socialists  and  advocates  of  state 
intervention  than  to  benefit  them  by  helping  them  to  main- 
tain the  standard  of  comfort  reached  by  them  during  the 
period  when  British  industry,  by  reason  of  its  practical 
monopoly  of  the  manufacturing  field,  was  highly  prosperous. 
English  toilers  will  find  that  so  long  as  foreign  competition 
is  unrestrained  the  tendency  to  bring  all  competitors  to  a 
common  level  of  degradation  must  prove  irresistible. 

It  is  to  be  feared  that  this  discovery  may  be  made  too 
late  and  that  when  the  attempt  is  made  to  rectify  the  evil 
it  will  lead  to  a  revolution — in  all  probability  a  bloodless 
one — in  which  the  existing  order  will  be  overturned  and  a 
system  of  state  control  substituted  in  its  stead.  There 
are  Englishmen  who  dread  this  outcome  and  who  do  not 
hesitate  to  express  their  fears,  but  their  proposed  panaceas 
and  advice  are  unheeded.  They  could  not  prove  otherwise 
than  valueless,  because  they  are  compounded  into  a  mixture 
which  has  unrestrained  competition — the  cause  of  all  the 
trouble — as  its  principal  ingredient. 

Turning  from  the  condition  of  the  English  to  that  of 
the  American  worker,  we  find  some  analogies  which  may 
strike  the  superficial  as  presenting  difficulties  as  grave  as 
those  confronting  the  British.  But  there  is  this  substantial 
difference  in  the  situation :  our  evils  are  recognized  and 
may  be  cured ;  those  of  the  English  system,  though  plainly 
seen,  must  be  endured  if  free  trade  is  to  be  retained.  Briefly, 
it  may  be  said  that  protection,  by  confining  competition  to 

30 


466        PROTECTION  AND  PROGRESS 

an  area  in  which  all  the  conditions  are  equal,  or  can  be  made 
equal,  may  be  made  to  work  advantageously,  provided  the 
remedies  for  abuses  of  its  workings  which  may  be  easily 
applied  are  not  disregarded. 

Let  us  see  whether  this  claim  cannot  be  maintained. 
To  begin  properly  it  is  essential  to  show  that  there  is  no 
foundation  for  the  assumption  of  the  Cobdenites  that  the 
eflFect  of  protection  is  to  stifle  competition.  It  is  true  that 
its  purpose  is  to  shut  out,  as  far  as  practicable,  the  foreigner 
from  the  domestic  markets  for  those  articles  which  can 
readily  be  produced  at  home,  but  within  the  protected  area 
competition  has  free  play.  That  the  operation  of  competi- 
tion within  a  protected  area  may  be  as  conducive  to  cheapness 
as  world  wide  competition  has  already  been  shown  by  indis- 
putable testimony.  We  have  the  evidence  of  English 
specialists  that  the  iron  and  steel  industry  of  the  United 
States  is  now  on  a  footing  which  makes  it  an  object  of  dread 
to  British  manufacturers,  who  see  the  profits  of  our  rolling 
mills  and  machine  shops  driving  their  own  wares  out  of 
markets  which  they  have  hitherto  monopolized.  The  same 
concession  is  made  regarding  our  cotton  textiles,  many 
grades  of  which  are  successfully  sold  in  the  Orient  in  sharp 
competition  with  the  products  of  British  and  German  looms. 
The  tale  told  by  the  price  lists  of  the  different  countries 
of  the  world  amply  corroborates  the  admissions  of  the 
specialists  and  English  trade  journals.  Our  growing  exports 
of  manufactured  articles  confirm  the  statement  that  the 
cheapening  of  production  during  the  thirty-five  years  since 
the  close  of  the  American  civil  war  has  been  as  great  in  the 
United  States  as  in  any  country  on  the  globe,  and  it  may  be 
added  that  during  this  period,  owing  to  the  tremendous 
stimulus  given  to  production  by  protective  tariflfs  in  this 
and  other  countries,  the  process  of  making  manufactured 
articles  more  accessible  to  the  mass  of  consumers  has  gone 
on  more  rapidly  than  at  any  other  time  in  the  history  of  the 
world. 


WORKINGMEN    AND   WAGES  467 

That  a  cheapening-  of  production  should  have  marked 
the  development  of  the  manufacturing  industry  in  the 
United  States  under  the  protective  system  is  not  marvelous, 
although  the  Cobdenites  have  sought  to  make  such  a  result 
appear  impossible.  Their  chief  mistake  was  due,  as  has 
already  been  shown,  to  the  erroneous  idea  that  capital  for 
the  conduct  of  manufacturing  enterprises  would  be  difficult 
to  acquire  and  to  the  notion  that  manufacturing  skill  was  not 
widely  diffused.  These  were  fundamental  errors.  Experi- 
ence has  shown  that  Smith,  Mill  and  all  the  other  economists 
vastly  overrated  the  difficulties  attending  the  creation  of  a 
capital  sufficient  to  carry  on  manufacturing  enterprises, 
and  the  prevalent  opinion  of  the  Manchester  school  that 
the  people  inhabiting  a  country  of  great  agricultural  re- 
sources must  necessarily  be  absorbed  in  the  tilling  of  the  soil 
to  such  an  extent  as  to  unfit  them  for  the  cunning  and 
skillful  work  of  the  machine  shop  or  factory  has  been 
dissipated  by  an  example  of  manufacturing  growth  which 
has  amazed  the  world. 

The  horizon  of  the  Cobdenites  was  entirely  too  narrow. 
It  was  cribbed  and  confined  by  the  shores  of  the  little 
island  in  which  the  "ism"  had  its  birth.  Those  adhering 
to  the  doctrines  of  laisses  faire  were  so  much  impressed 
by  the  great  strides  made  by  the  English  in  manufacturing 
that  they  really  imagined  that  it  would  be  fatal  to  the  rest 
of  mankind  to  refuse  to  avail  themselves  of  the  comparatively 
marvelous  cheapness  resulting  from  British  skill  and  inge- 
nuity. It  was  this  belief  which  gave  birth  to  the  confident 
declaration  of  the  English  free  traders  that  protection  could 
not  protect  and  made  them  predict  disaster  to  those  countries 
resorting  to  it.  Even  now  the  contention  that  protection 
is  an  obstacle  to  production  is  not  wholly  abandoned.  We 
still  find  professors  working  in  the  seclusion  of  university 
cells  proclaiming  that  protection  represses  production  and 
that  no  country  practicing  it  can  hope  to  build  up  a  great 
external  trade.    For  writers  of  this  kind  the  fact  that  the 


468        PROTECTION  AND  PROGRESS 

exports  of  domestic  products  from  the  United  States  in  the 
fiscal  year  1897-98  were  greater  than  the  exports  of  EnglisTi 
products  in  the  same  year  has  no  special  significance,  nor 
are  they  impressed  by  the  assertions  of  such  competent 
observers  as  J.  Stephen  Jeans,  who  distinctly  proclaim  that 
protection  gives  a  decided  advantage  to  a  manufacturing 
country,  because  back  of  the  barriers  reared  by  the  system 
the  manufacturer  may  conduct  his  operations  with  the  assur- 
ance of  good  prices  that  a  secure  home  market  gives  and 
relieve  himself  of  his  surplus  products  by  dumping  them  on 
foreign  markets  where  the  aberration  of  prices  can  affect  him 
very  slightly. 

This  declaration  of  Jeans  has  been  enlarged  upon  in 
another  connection,  but  it  is  necessary  to  recur  to  it  here 
because  it  contains  an  observation  which  has  a  direct  bearing 
on  the  subject  of  the  well  being  of  the  workingman  in  a 
protective  country.  The  passage  need  not  be  quoted  in 
its  entirety,  as  it  is  reproduced  very  fully  in  another  chapter.* 
After  recapitulating  the  advantages  enjoyed  by  the  protected 
manufacturers  of  Germany  and  the  United  States,  Mr.  Jeans 
proceeds  thus:  "There  is  method  in  this  arrangement. 
With  production  on  a  large  scale  standing  charges  are 
kept  down  and  the  cost  of  manufacture  is  lessened,  while 
the  workmen,  having  full  and  regular  wages,  are  not  likely 
to  be  so  difficult  to  handle  as  they  would  be  if — as  often 
happens  in  England — they  were  employed  only  to  the  extent 
of  one-half  or  two-thirds  of  the  full  time." 

This  testimony  is  invaluable,  because  it  is  that  of  a  free 
trader  and  a  competent  critic,  Mr.  Jeans  being  secretary  of 
the  British  Iron  and  Steel  Association  at  the  time  he  ex- 
pressed the  view  quoted.  It  is  well,  therefore,  to  endeavor 
to  grasp  the  full  significance  of  what  he  tells  us,  and  also 
to  inquire  whether  what  he  has  noted  may  not  have  other 
and  more  far-reaching  consequences  than  he  supposes.  It 
is  true  Mr.  Jeans  refers  to  the  position  of  Great  Britain 

*Chapter  VII,  pp.  142,  143. 


WORKINGMEN   AND   WAGES  469 

and  intimates  that  her  adherence  to  free  trade  will  prove  a 
hindrance  to  her  adopting  a  policy  which  could  success- 
fully meet  such  tactics  as  those  described,  but  he  evidently 
did  not  fully  consider  the  importance  of  the  question  to  the 
workingmen  of  England.  He  speaks  of  the  advantage 
the  manufacturer  in  the  protected  country  may  derive  from 
his  ability  to  satisfy  his  workingmen  by  giving  them  full 
and  regular  wages,  but  he  does  not  point  out  the  cause  of  the 
disadvantages  under  which  English  workingmen  must  labor 
so  long  as  Great  Britain  is  subjected  to  what  may  be  called 
the  process  of  dumping  surpluses  on  her  markets.  He  says 
this  dumping  process  can  be  "effectively  met  only  by  the 
adoption  of  a  similar  economic  system,  which,  however, 
cannot  be  looked  for  in  England,  wedded  as  she  is  to  free 
trade,  whatever  consequences  that  system  may  involve." 

Although  Mr.  Jeans  clearly  intimates  that  the  result 
may  be  disastrous  to  his  countrymen,  he  shrinks  from  de- 
scribing it.  He  is  still  under  the  glamour  of  the  Manchester 
school  and  hesitates  to  unreservedly  lay  before  his  readers 
the  fact  that  England  is  permitting  herself  to  be  deluged 
with  the  surplus  goods  of  other  countries  because  her 
economists  are  trying  to  preserve  the  keystone  of  the  arch 
of  Cobdenism — cheapness,  no  matter  what  the  cost.  But 
the  keystone  is  rotten  and  endangers  the  whole  edifice.  Mr. 
Jeans,  were  he  to  speak  frankly,  would  be  compelled  to  admit 
that  Great  Britain,  by  the  action  of  the  manufacturers  of 
surpluses  in  the  United  States  and  other  countries,  is  menaced 
by  the  same  danger  to  which  the  incipient  industries  of  a 
protected  country  are  subjected  by  well  established  rivals 
when  they  make  a  temporary  sacrifice  of  profits  in  order  to 
effect  the  permanent  gain  of  crushing  a  possible  or  probable 
competitor. 

That  was  the  policy,  as  we  have  shown  elsewhere,  of 
the  British  in  dealing  with  competitors  during  the  period 
preceding  and  following  the  abrogation  of  the  corn  laws, 
and  it  proved  successful  until  it  was  met  by  the  imposition 


470      PROTECTION  AND  PROGRESS 

of  high  tariffs  in  the  countries  threatened  with  an  inundation 
of  British  goods.  The  fact  that  the  rivals  Great  Britain 
had  to  deal  with  were  deficient  in  capital,  while  under  the 
reversed  conditions  she  has  an  abundance,  does  not  materially 
alter  the  case.  No  matter  how  great  may  be  the  accumula- 
tions of  the  English  it  is  not  likely  that  they  will  go  on 
indefinitely  dissipating  them  in  unprofitable  manufacturing 
adventures.  If  the  practice  described  by  Jeans  is  continued 
and  Great  Britain  consents  to  receive  all  the  goods  offered 
to  her  at  a  less  cost  than  her  manufacturers  can  produce 
them,  the  inevitable  result  must  be  the  extinction  of  her 
chief  industries. 

This  is  not  likely  to  be  accomplished  in  a  day.  The 
process  of  constriction  will  be  a  slow  one  and  capitalists 
and  workingmen  alike  will  be  called  upon  to  endure  a  great 
deal  while  it  is  in  progress.  The  latter  will  be  powerless  to 
help  themselves  by  means  of  their  trades  unions.  For  a  while 
they  may  win'  victories  and  by  their  solidarity  succeed  in 
forcing  the  employer  to  surrender  more  and  more  of  his 
profits.  They  may  even,  before  the  struggle  is  terminated, 
succeed  in  compelling  the  employer  to  pay  a  living  wage 
long  after  the  latter  has  ceased  to  make  profit,  and  it  is  a 
characteristic  of  established  industry  to  persist  in  the  face 
of  loss,  the  hope  of  something  better  turning  up  preventing 
the  owners  of  capital  abandoning  their  investments  until 
they  are  absolutely  forced  to  do  so.  But  in  the  end  there 
must  be  a  surrender,  because  no  manufacturing  or  other 
industry  can  be  permanently  carried  on  without  hope  of 
profit. 

The  abnormal  conditions  produced  in  Great  Britain  by 
the  undue  expansion  of  the  manufacturing  industry  induces 
many  who  perceive  the  drift  of  the  argument  of  Jeans  to 
believe  that  it  would  be  impossible  for  the  British  to  adopt 
a  policy  which  would  afford  a  reasonable  protection  to  the 
English  producer.  They  assume  that  the  cheap  loaf  is  essen- 
tial to  the  maintenance  of  the  present  commercial  position  of 


WORKINGMEN   AND   WAGES.  471 

the  islands  and  they  keep  before  the  v/orkingman  a  picture 
of  the  consequences  that  might  ensue  if  they  were  called  upon 
to  pay  a  trifle  more  for  their  flour  and  bacon,  but  they 
refrain  from  discussing  the  results  that  might  flow  from  the 
imposition  of  protective  duties  on  manufactured  goods  im- 
ported into  England.  It  is  true  the  subject  is  not  entirely 
ignored,  but  the  toiling  class'es  are  never  permitted  to  see 
that  the  real  beneficiaries  of  the  cheapness  resulting  from 
the  free  admission  of  foreign  manufactures  are,  as  a  rule, 
the  members  of  the  well-to-do  class. 

In  1896  the  imports  of  manufactured  goods  into  the 
United  Kingdom  were  valued  at  £81,250,453.  If  the  English 
worllcer  would  examine  the  items  making  this  total  he  would 
see  that  they  almost  wholly  represent  articles  which  his 
class  never  consumes.  Silks  and  other  luxuries  embrace  a 
large  proportion  of  the  whole.  As  all  free  traders,  from 
Adam  Smith  down,  are  perfectly  agreed  that  the  tax  on 
luxuries  must  be  borne  by  the  consumer  it  can  easily  be 
seen  that  British  workingmen  are  the  victims  of  a  deception 
practiced  by  the  well-to-do  classes,  who,  through  their 
mouthpieces,  teach  that  the  people  generally  are  benefited 
by  the  cheapening  of  such  products,  or,  to  put  it  in  another 
way,  that  the  workers  would  be  injured  by  raising  the  prices 
of  such  luxuries  to  consumers. 

It  ought  to  be  plain  that  the  enhancement  of  the  cost 
of  kid  gloves  to  the  class  wearing  them  could  not  prove 
injurious  to  the  working  people  who  never  see  such  articles 
except  in  the  shop  windows  or  on  the  hands  of  those  who 
do  not  toil  for  a  living,  and  it  ought  to  be  equally  clear  that 
if,  by  the  imposition  of  a  protective  tariflf,  a  glove  industry 
could  be  created  and  maintained  in  England  which  would 
give  employment  at  remunerative  wages  to  a  large  number 
of  people  the  working  class  would  be  benefited  even  though 
the  consumers  of  gloves  were  obliged  to  pay  more  for  the 
domestic  production. 

The  English  once  maintained  a  profitable  silk  spinning 


472      PROTECTION  AND  PROGRESS 

and  weaving  industry  that  finally  succumbed  to  the  encroach- 
ments of  cheaper  foreign  labor,  because  the  silk  products 
of  other  countries  were  freely  admitted  into  the  United 
Kingdom.  In  1896  the  value  of  the  manufactured  silks 
imported  into  the  British  Isles  was  £16,707^103.  What 
proportion  of  this  amount  of  imported  silks  was  consumed 
by  the  well-to-do  classes  no  one  can  state  with  exactness, 
but  there  is  reason  to  believe  that  fifteen-sixteenths  of  the 
entire  quantity  of  foreign  silk  goods  brought  into  England 
is  purchased  by  the  rich  non-producer,  only  an  infinitesimal 
part  being  used  by  the  workers  in  the  shape  of  cheap  ribbons, 
etc.  Will  anyone  seriously  assert  that  the  working  people 
of  England  would  have  been  injured  if  a  tariff  on  silks  suffi- 
cient to  protect  the  manufacturer  had  been  maintained,  thus 
preventing  the  extinction  of  a  profitable  industry?  If  so, 
they  are  referred  to  the  experience  of  the  United  States, 
in  which  country,  under  a  high  protective  tariff,  an  enormous 
silk  spinning  and  weaving  industry,  surpassing  in  magnitude 
that  of  any  other  nation,  has  been  built  up.  And  concurrently 
with  its  upbuilding,  it  may  be  added,  there  has  grown  a  taste 
among  the  American  working  people  for  silk  fabrics,  accom- 
panied by  the  ability  to  gratify  it,  a  phenomenon  witnessed 
in  no  country  where  living  is  cheap  and  wages  are  low. 

It  is  not  necessary  to  go  through  the  whole  list  of 
English  imports  to  establish  the  fact  that  free  trade  inures 
more  largely  to  the  advantage  of  the  non-producing  classes 
than  to  the  workers.  Even  in  the  matter  of  food  products 
it  is  seen  that  a  large  proportion  consists  of  articles  chiefly 
consumed  by  the  well-to-do.  How  many  of  the  13,244,893 
great  hundreds  of  eggs  imported  into  England  in  1896  were 
consumed  by  the  working  classes  ?  Some,  no  doubt ;  but  the 
major  part  were  eaten  by  people  who  could  easily  have  paid 
a  slight  advance  in  the  price  which  a  protective  duty  might 
have  caused,  and  the  sacrifice  demanded  of  them  could  not 
have  affected  the  masses,  because  the  consumer  of  luxuries 
cannot  shift  the  tax.    How  much  of  the  3,037,947  cwt. 


WORKINGMEN    AND    WAGES.         473 

of  imported  butter  was  consumed  by  English  workingmen, 
and  what  quantity  of  the  fine  wines  and  spirits,  the  duties 
upon  which  are  carefully  countervailed  by  a  domestic  excise, 
falls  to  his  lot  ?  Is  it  not  a  mockery  to  say  that  the  cheapness 
of  these  things  benefits  the  British  workingmen,  especially 
when  it  can  be  so  easily  demonstrated  that  their  free  en- 
trance is  compelling  the  domestic  producer  to  sell  his  prod- 
ucts at  a  loss  or  go  out  of  the  business  entirely  ? 

Instead  of  Great  Britain  being  a  poor  field  for  the 
operation  of  the  protective  system  it  is  really  one  in  which 
it  might  be  made  to  work  admirably.  Unless  it  is  assumed 
that  the  higher  cost  of  such  competing  articles  as  are  now 
imported  into  England  duty  free  would  have  the  effect  of 
driving  the  well-to-do  classes  who  absorb  nine-tenths  of 
the  British  revenues  from  trade,  commerce  and  other  sources 
to  other  lands,  it  must  be  admitted  that  working  people 
would  be  the  gainers  by  a  resort  to  a  policy  which  had  for 
its  object  the  shifting  of  the  incidence  of  taxation  so  that 
the  chief  burden  would  fall  upon  those  best  able  to  bear  it, 
and  not  upon  workingmen  whose  wages  are,  by  the  pressure 
of  competition,  pressed  to  the  subsistence  limit. 

Such  a  change  of  system  would  undoubtedly  make 
England  a  dearer  country  for  the  well-to-do  to  live  in,  but 
it  would  make  it  a  better  country  for  the  workingman,  as  it 
would  permit  the  successful  operation  of  the  principle  of 
labor  organization  within  the  area  of  the  United  Kingdom. 
That  trades  unionism  cannot  achieve  its  object  unless  there 
is  a  definite  area  in  which  it  can  enforce  its  rules  without 
risk  of  outside  interference  ought  to  be  apparent  to  the 
least  critical.  What  profit  can  the  workingmen  of  England 
derive  from  standing  together  if  the  rest  of  the  world's 
workers  are  banded  against  them?  If  the  unions  of  the 
United  Kingdom  combine  to  keep  up  the  wages  of  labor  and 
the  result  of  their  combination  is  to  invite  the  foreign 
producer  to  send  his  wares  to  fill  the  demand  which  arises 
during  the  period  while  he  is  waging  the  conflict  with  his 


474        PROTECTION  AND  PROGRESS 

employers,  and  if  the  foothold  thus  gained  is  permanently 
maintained,  the  English  workingman  must  be  a  loser  and  not 
a  gainer 

This  is  an  experience  through  which  English  workingmen 
have  recently  passed.  It  is  admitted  on  every  hand  that  the 
net  result  of  the  "engineers'  "  strike  of  1897  was  a  positive 
loss  to  British  industry  inasmuch  as  there  are  decided  indi- 
cations that  during  the  period  while  it  was  in  progress 
foreign  producers  of  machinery  managed  to  successfully 
introduce  their  wares  into  the  English  home  market,  and 
in  many  instances  succeeded  in  supplanting  British  machin- 
ery in  markets  where  it  formerly  met  with  little  or  no  rivalry. 
The  London  Standard,  speaking  of  the  results  of  the  strike 
referred  to,  adduced  evidence  showing  a  considerable  loss 
of  the  export  trade  o'f  machinery,  the  Germans  having  taken 
advantage  of  the  strike  to  invade  markets  once  held  by  the 
English,  and  the  editor  incidentally  remarked  that  "experi- 
ence teaches  that  where  German  traders  once  gain  a  footing 
they  never  relinquish  it."  The  Pottery  Gazette,  an  English 
publication,  discussing  the  effects  of  strikes  on  the  British 
glass  industry,  declared  that  it  had  been  ruined  by  the  action 
of  unions.  "If  it  had  not  been  for  the  blind  policy  of  the 
men's  societies,"  remarked  the  Gazette,  "the  pressed  glass 
trade  of  the  north  of  England  would  have  found  work  for 
hundreds  where  it  now  employs  units.  When  our  pressed 
glass  workers  quarreled  with  their  bread  and  cheese,  orders 
for  pressed  goods  went  to  Belgium  and  France,  and  they 
have  gone  there  ever  since."  To  this  was  added  an  inquiry 
which  had  the  air  of  a  prediction.  "We  have,"  said  the 
writer,  "had  instances  of  great  national  industries  being  lost 
to  us  by  the  attitude  of  the  workers  in  them.  Is  the  glass 
trade  to  be  added  to  them?" 

The  deduction  that  the  Pottery  Gazette  drew  from  these 
circumstances  and  actions  was  that  it  is  absurd  for  the 
English  workingmen  to  involve  themselves  in  contests  which 
result  in  the  destruction  of  the  industry  from  which  they 


WORKINGMEN   AND   WAGES.  475 

derive  their  livelihood.  No  matter  what  may  be  the  bias 
of  the  writer,  his  judgment  in  this  instance  is  unimpeachable. 
There  can  be  no  doubt  whatever  that  English  trades  union- 
ism will  be  powerless  to  prevent  the  impairment  of  the 
standard  of  comfort  attained  by  the  workers  of  Great  Britain 
while  the  trade  doors  of  the  country  are  permitted  to  stand 
wide  open.  It  is  worse  than  folly  for  the  unionists  to  resist 
reductions  of  wages  made  necessary  by  the  competition  of 
foreigners  when  the  inevitable  outcome  of  success  would 
be  the  destruction  of  the  industry  in  which  they  are  engaged. 
As  already  remarked,  labor  organizations  have  the  power  to 
compel  employers  to  surrender  a  larger  proportion  of  their 
profits  to  the  wage  earner,  but  they  cannot  force  capital 
to  conduct  enterprises  at  a  loss.  Therefore,  when  a  strike 
is  inaugurated  in  a  free  trade  country  which  has  for  its 
object  the  preservation  of  the  existing  scale  of  wages  it  must 
prove  unsuccessful  if  the  strikers  are  engaged  in  the  manu- 
facture of  an  article  which,  owing  to  cheaper  labor,  can  be 
produced  more  cheaply  in  other  countries.  In  such  cases 
the  suspension  of  work  by  the  strikers  is  the  signal  for  the 
invasion  of  the  country  by  the  foreigner  with  his  cheaper 
goods,  and  if  the  strikers  are  unyielding  the  result  is  perma- 
nent occupancy  of  the  home  market  by  the  foreigner  and  the 
displacement  of  the  native  product. 

It  has  been  the  dream  of  some  trades  unionists  that 
an  international  combination  of  workingmen  might  be 
effected,  but  no  sane  person  believes  that  this  can  be  accom- 
plished. The  conditions  vary  so  greatly  in  different  nations 
it  is  inconceivable  that  a  common  agreement  as  to  hours 
of  labor  and  rates  of  wages  could  be  reached.  Moreover, 
there  is  an  obstacle  in  the  way  of  a  desire  for  such  agreement 
which  is  almost  insuperable,  namely,  the  feeling  on  the  part 
of  those  who  are  backward  in  the  race  that  is  is  only  by 
greater  exertion  that  they  can  keep  up  with  the  march  of 
progress.  Perhaps  the  sentiment  is  not  as  well  defined 
as  this  language  would  imply,  but  that  the  disposition  to  put 


476        PROTECTION   AND   PROGRESS 

forth  greater  exertions  exists  in  some  countries  where  the 
quality  of  labor  is  rated  lower  than  in  England  is  notorious, 
and  there  is  good  reason  to  believe  that  it  cannot  easily 
be  changed.  It  certainly  will  not  be  by  such  appeals  as  the 
English  trades  unionists  send  forth,  which  often  take  the 
form  of  an  assurance  to  the  competing  foreign  workingman 
that  if  he  would  fight  fairly  by  asking  as  high  wages  and  by 
insisting  on  working  as  few  hours  as  the  British  workman 
the  latter  would  deprive  him  of  all  opportunity  to  earn  a 
living. 

Lecky  tells  us  that  "the  idea  of  an  international  regula- 
tion of  labor  has  of  late  years  spread  widely.  It  has  been 
proposed  in  several  workingmen's  congresses  and  in  1881 
and  again  in  1889  the  Swiss  Federal  Council  invited  the 
leading  powers  of  Europe  to  join  in  a  conference  on  the 
subject.  The  invitation  was  not  warmly  received,  but  in 
1890  the  Emperor  of  Germany  took  up  the  subject,  and  at 
his  invitation  the  representatives  of  fourteen  states  assembled 
in  Berlin.  They  soon  decided  that  they  could  do  no  more 
than  submit  some  very  platonic  recommendations  to  the 
public,  without  attempting  in  any  way  to  enforce  their  deci- 
sion or  even  bind  the  governments  they  represent."  The 
conception  of  such  an  idea  indicates  the  lengths  to  which 
men  will  go  in  the  direction  of  making  themselves  absurd  in 
their  efforts  to  escape  the  consequences  of  methods  which 
the  world  has  tacitly  agreed  to  accept  and  continue  as  the 
best  that  can  be  adopted  to  insure  the  progress  of  the  human 
race.  The  desire  to  retain  the  competitive  system,  and  the 
apprehension  that  state  socialism  might  prove  disastrous, 
caused  men  who  can  think  clearly  enough  when  other  sub- 
jects are  under  consideration  to  imagine  that  an  almost 
ineradicable  sentiment  could  be  overcome — that  of  nation- 
ality— and  that  peoples  animated  by  different  political  aspira- 
tions and  with  totally  different  ideals  of  life  could  agree 
upon  a  proposition  which  involved  the  necessity  of  their 


WORKINGMEN   AND   WAGES.  477 

refraining  from  making  sacrifices  which  might  put  them  on 
a  level  with  or  give  them  a  superiority  over  rivals. 

In  antiquity  and  in  the  days  of  chivalry  the  opposing 
combatants  sometimes  stepped  forth  from  the  ranks  to  do 
battle  for  their  respective  sides,  both  armies  agreeing  to 
abide  by  the  result.  Those  days  and  manners  have  passed. 
Now  when  nations  engage  with  each  other,  while  the  strug- 
gle rarely  carries  the  combatants  to  the  last  ditch,  it  is 
usually  maintained  until  one  of  them  feels  that  he  can  gain 
no  further  advantage.  So,  too,  in  commercial  warfare. 
The  fight  is  always  for  advantage;  and  while  it  may  be 
admitted  that  exchanges  freely  made  represent  a  gratification 
of  desire  on  both  sides,  there  can  be  no  doubt  that  each 
party  to  a  trade  seeks  to  make  as  much  profit  as  he  can  out 
of  the  transaction. 

In  a  large  sense  nations  are  animated  by  the  same  motive. 
The  sentiment  which  we  designate  as  patriotism  is  always 
strongest  in  those  countries  in  which  the  national  wealth 
is  the  symbol  of  power.  This  is  natural.  The  land  which 
affords  the  masses  an  opportunity  to  earn  a  living  is  worth 
struggling  for.  That  which  merely  permits  existence  can 
never  inspire  the  same  feeling.  The  recognition  of  this 
fact  is  at  the  bottom  of  all  intelligent  struggles  for  national 
advantage.  The  free  trader  who  endeavors  to  inculcate 
the  belief  that  unrestrained  commercial  intercourse  tends  to 
the  preservation  of  peace  also  teaches  that  it  will  increase 
the  national  wealth.  It  is  impossible  to  believe  that  the 
policy  he  advocates  would  have  many  adherents  if  he  failed 
to  do  so.  The  imagination  cannot  be  fired  by  pointing  out 
that  the  whole  world  will  be  equally  benefited  by  pursuing 
a  certain  course.  It  is  noteworthy  that  Cobden  and  his  fol- 
lowers, while  teaching  that  all  mankind  would  profit  by  free 
trade,  were  careful  to  point  out  that  Great  Britain  would 
be  an  enormous  gainer  and  that  her  already  swollen  coffers 
would  be  filled  to  overflowing  if  other  nations  could  be  per- 


478       PROTECTION  AND  PROGRESS 

suaded  that  their  interests  would  be  advanced  by  making 
England  the  world's  workshop. 

There  is  no  escape  from  the  logic  of  these  facts ;  there- 
fore, if  mankind  is  indisposed  to  abandon  the  incentive  to 
progress  which  competition  is  universally  recognized  to  be, 
steps  must  be  taken  to  regulate  it.  The  chafing  against  the 
existing  order,  if  carefully  investigated,  will  be  found  to 
be  largely  due  to  a  perception  of  the  fact  that  the  terms 
of  the  race  are  not  fairly  arranged.  The  element  of  fairness 
is  never  considered.  The  major  part  of  those  who  enter 
the  competition  are  heavily  handicapped  with  disadvantages. 
These  must  be  removed  before  discontent  can  be  appeased. 
A  lesson  will  have  to  be  taken  by  statesmen  from  the  race- 
course, where  the  owner  of  a  horse  of  acknowledged  supe- 
riority is  only  permitted  to  enter  his  animal  on  condition  that 
he  conforms  to  certain  regulations  designed  to  remove  the 
disparities  of  contestants. 

At  bottom,  this  is  the  theory  of  the  English  trades 
unionists,  but  it  does  not  work  well  in  practice,  because  the 
field  of  contest  chosen  by  Great  Britain  is  the  whole  world, 
which  refuses  to  be  bound  by  the  regulations  that  the 
British  seek  to  prescribe.  But  the  conditions  are  different 
in  a  protectionist  country  such  as  the  United  States.  Be- 
hind the  barrier  of  a  protective  tariff  it  is  possible  to  so 
arrange  matters  that  the  competitive  contest  will  be  con- 
ducted on  reasonably  fair  terms.  If  the  trades  organiza- 
tions succeed  in  effecting  combinations  they  are  not  men- 
aced by  the  apprehension  of  the  foreign  competitor  when 
they  seek  to  carry  their  designs  into  execution.  It  would 
hardly  be  possible  for  the  employers  of  a  country  with  a 
high  protective  tariff  to  stand  out  against  the  just  demands 
of  workingmen.  It  is  only  the  pressure  of  competition 
that  forces  employers  to  proceed  to  extremes,  and  when 
that  from  foreign  countries  is  removed  the  incentive  is 
reduced  to  a  minimum.  John  Bright,  in  the  letter  quoted 
from  in  the  beginning  of  this  chapter,  warned  the  Amer- 


WORKINGMEN   AND   WAGES  479 

ican  manufacturers  that  they  would  have  trouble  on  this 
score.  He  told  them  plainly  that  "protection  would  not 
content  itself  with  enriching  manufacturers,  but  will  be 
called  in  to  give  higher  wages  and  shorter  hours  of  labor 
to  your  (American)   workmen." 

So  it  has,  and  strange  to  say,  although  Mr.  Bright  chose 
to  ignore  the  fact,  it  is  on  that  ground  that  the  American 
people  support  the  protective  policy.  They  doubtless  recog- 
nize that  manufacturers  sometimes  become  rich,  but  they  do 
not  lose  sight  of  the  necessity  of  permitting  his  employes 
to  earn  a  living  wage,  and  to  that  end  they  encourage  legis- 
lation which  directly  aims  at  the  preservation  of  the  free- 
dom of  labor.  The  alien  contract  labor  laws  were  framed 
for  the  purpose  of  diminishing  the  fierceness  of  the  struggle 
for  work  by  depriving  employers  of  the  privilege  of  import- 
ing help  from  other  lands  at  lower  wages.  The  laws  passed 
to  prevent  Chinese  laborers  entering  the  United  States  had 
the  same  motive  and  were  enacted  in  response  to  the 
demand  to  exclude  from  competition  with  American  labor 
a  class  of  workers  who  are  notoriously  disinclined  to  raise 
their  standard  of  living  or  to  adopt  customs  which  would 
put  them  on  the  same  plane  of  expenditure  as  the  worker 
in  this  country.  And  consistent  with  these  regulations  are 
those  which  practically  exclude  from  the  country,  by  com- 
pelling them  to  pay  a  high  tariff  for  the  privilege  of  enter- 
ing our  markets  all  goods  produced  by  the  classes  who  are 
shut  out  by  the  operation  of  our  immigration  laws. 

The  admitted  effect  of  these  laws  and  regulations  is  to 
keep  up  the  real  wages  of  American  labor,  and  while  pro- 
tection is  the  national  policy  it  will  always  be  possible 
to  confine  competition  within  bounds  which  will  make  it 
fair  to  those  obliged  to  compete.  It  is  not  contended  here 
that  the  system  has  always  worked  perfectly  in  practice  in 
the  United  States,  but  it  is  asserted  that  under  it  the  work- 
ingman  enjoys  opportunities  which  free  trade  denies  him. 
In  short,  the  combinations  of  trades  unions  may  be  made 


48o       PROTECTION   AND   PROGRESS 

thoroughly  effective  in  a  protective  country,  but  cannot 
possibly  be  made  so  where  there  is  absolute  freedom  of 
intercourse  between  nations.  If  workingmen  in  the  United 
States  fail  to  reap  the  advantages  described,  deficient  organ- 
ization and  not  lack  of  opportunity  must  be  held  respon- 
sible. Protection  in  a  country  where  the  workingmen  may 
be  the  chief  factor  in  the  making  and  administration  of  the 
laws  is  the  means  by  which  trades  unionists  can  achieve 
their  purpose  of  securing  a  fair  share  of  the  wealth  pro- 
duced by  the  laboring  classes ;  such  organizations  in  free 
trade  countries  are  powerless  to  combat  the  logical  results 
of  unrestrained  competition,  which  are  to  degrade  all  com- 
peting workers  to  a  common  level. 

That  the  labor  unions  of  the  United  States  work  im- 
measurably more  effectively  for  the  workingmen  com- 
posing them  than  similar  organizations  in  England,  despite 
the  better  government  and  regulation  of  those  of  the  latter 
country,  is  proved  by  a  variety  of  circumstances.  Lecky 
observes  that  "extraordinary  development  of  labor-saving 
inventions  in  the  United  States  is  probably  largely  due  to 
the  great  cost  of  American  labor."*  In  a  country  where 
wages  are  low  the  incentive  to  resort  to  labor-saving  de- 
vices is  never  very  strong  and  their  use  is  always  resisted, 
passively  or  actively,  by  the  workers  in  low  standard  coun- 
tries. It  is  a  significant  fact  that  in  free  trade  England 
during  recent  years  improvements  in  production  by  means 
of  automatic  machinery  have  been  antagonized  by  the 
trades  unions,  while  in  the  United  States  workingmen  rarely 
oppose  the  introduction  of  labor-saving  machinery.  It  is 
noteworthy  that  the  feeling  so  prevalent  in  Europe  that 
the  tendency  to  improve  methods  of  production  more 
rapidly  than  effective  distribution  can  be  promoted  is  in- 
jurious to  the  workingmen  is  not  widely  diffused  in  this 
country — although   the    development   of   the   resources   of 

*Lecky,  Democracy  and  Liberty,  Vol.  II,  p.  459. 


WORKINGMEN    AND   WAGES  481 

the  United  States  is  proceeding  at  a  pace  which  makes  that 
of  rival  nations  seem  slow. 

There  can  only  be  one  explanation  of  this  comparative 
apathy  regarding  automatic  machinery,  and  that  is  that 
there  is  a  feeling  that  in  this  country  the  masses  have  a 
chance  of  sharing  in  the  benefits  flowing  from  the  rapid 
increase  in  the  production  of  wealth.  They  realize  that 
the  protective  system  acts  as  a  barrier  against  the  encroach- 
ments of  foreign  labor,  and  they  are  confident  that  so  long 
as  they  can  restrict  competition  to  an  area  in  which  all  the 
competitors  are  on  a  common  footing  they  can  hold  their 
own  against  the  tendency  to  drive  wages  to  the  limit  of 
subsistence.  This  sense  of  security  accounts  for  the  com- 
parative weakness  of  the  socialistic  propaganda  in  the 
United  States,  a  circumstance  that  has  attracted  the  atten- 
tion of  observant  foreign  critics  of  American  institutions. 
One  of  these  recently  remarked :  "Certainly  the  plague  of 
idleness  and  suffering  exists  even  in  America,  but  there  is 
not  to  be  found  there  that  canny  proletariat  which  the 
sociologists  of  this  end  of  the  nineteenth  century  declare  to 
be  one  of  the  most  marked  characteristics  of  the  period  in 
the  old  world."* 

It  is  reasonably  certain  that  the  American  workingmen, 
who,  as  this  writer  observes,  are  ready  enough  on  occasion 
to  enter  upon  the  most  obstinate  of  strikes,  would  not  show 
the  freedom  from  chronic  discontent  generally  witnessed  in 
the  old  world,  in  England  as  well  as  on  the  continent,  if 
they  did  not  feel  assured  that  they  were  secured  against 
the  degrading  eflfects  of  unrestrained  competition.  There 
must  be  some  foundation  for  the  assumption  of  Emil  Levas- 
seur,  who,  in  his  book  on  the  American  artisan,  brings  out 
the  fact  that  "it  is  the  workman  who  has  gained  most  by  the 
improvement  of  machinery"  in  the  United  States.     On  the 


*Fiamingo,  "Social  Conditions  in  America,"  translated  for  Living 
Age  from  Nuova,  Antologia,  Rome,  Italy. 
81 


482         PROTECTION  AND  PROGRESS 

other  hand  numerous  EngHsh  writers  admit  that  the  share 
of  the  British  workers  in  the  benefits  flowing  from  labor- 
saving  machinery  is  small  compared  with  that  enjoyed  by 
those  who  really  played  no  part  in  calling  it  into  existence. 
There  must  be  some  explanation  of  this  striking  difference 
in  results,  and  the  only  one  suggested  which  seems  at  all 
satisfactory  is  that  now  advanced,  that  the  protective  system 
so  intrenches  the  American  workingman  that  through  the 
instrumentality  of  trades  unions  he  can  compel  the  employer 
to  recognize  his  right  to  a  share  in  the  profits  derived  from 
the  use  of  labor-saving  machinery  and  appliances. 

It  has  often  been  urged  by  economists  that  the  admit- 
tedly superior  condition  of  the  American  workingman  is 
due  to  the  abundance  of  land  in  the  United  States.  This 
view,  however,  is  not  tenable.  The  history  of  labor  in  this 
country  demonstrates  conclusively  that  it  was  most  wretch- 
edly remunerated  when  land  was  most  easily  obtained.  In 
other  places  in  this  volume  it  has  been  shown  that  the  pov- 
erty among  the  early  settlers  of  Virginia  and  the  other 
colonies  was  often  extreme.  That  was  the  condition  of 
affairs  in  the  early  part  of  the  present  century  when  mil- 
lions of  acres  of  the  most  fertile  land  under  the  sun  could  be 
had  for  the  taking.  During  the  administration  which  wit- 
nessed the  outbreak  of  the  American  Civil  War  the  then 
President  sent  a  message  to  Congress  in  which  he  deplored 
the  fact  that  trade  and  manufacturing  industry  were  pros- 
trated and  that  men  were  out  of  work  and  in  great  misery 
in  the  midst  of  great  agricultural  prosperity.* 

In  the  face  of  evidence  of  this  kind  it  is  idle  to  assert 
that  the  American  workingman  owes  his  ability  to  maintain 
a  higher  standard  of  comfort  than  the  toilers  of  any  other 
part  of  the  globe  ever  succeeded  in  reaching  to  the  abund- 
ance of  free  land.  It  is  not  denied  that  the  facility  with 
which  transfers  of  land  may  be  effected  in  the  United 

♦Message  of  President  James  Buchanan. 


WORKINGMEN    AND    WAGES  4»3 

States  has  tended  to  destroy  the  advantage  which  the  ac- 
cumulation of  the  land  in  the  hands  of  a  few  affords,  and 
thus  prevented  a  condition  of  affairs  such  as  that  exist- 
ing in  England,  where  the  greater  part  of  the  soil  is  mo- 
nopolized by  the  few.  But  it  is  contended  by  protectionists 
that  this  dispersal  of  the  land  among  the  vast  numbers  of 
separate  owners — there  were  4,097,907  different  proprietors 
of  farming  land  in  the  United  States  in  1880,  and  the  num- 
ber increased  to  4,564,641  in  1890 — was  only  made  possible 
by  the  protective  system.  Had  free  trade  been  adopted  in 
this  country  there  can  hardly  be  any  question  but  that  it 
would  have  resulted  in  the  creation  of  enormous  farming 
estates  upon  which  the  opportunities  for  employment  would 
have  been  reduced  to  a  minimum.  The  separate  ownership 
of  millions  of  small  farms  in  the  United  States  is  almost 
wholly  due  to  the  fact  that  the  proximity  of  manufacturing 
centers  has  permitted  their  owners  to  earn  more  than  a  bare 
living. 

Had  we  permitted  foreign  countries  to  supply  our  de- 
mand for  manufactured  articles  the  condition  of  the  greater 
part  of  the  country  would  have  resembled  that  of  those  por- 
tions of  the  South  wholly  dependent  upon  the  profits  of  cot- 
ton culture.  Excessive  competition  has  made  this  pursuit 
so  unprofitable  that  the  usual  fate  of  the  planter  is  to  be  in 
perpetual  bondage.  Is  it  at  all  likely  that  the  grower  of 
cereals  would  have  been  in  much  better  case  if  the  manu- 
facturing industry  of  the  United  States  had  not  been  called 
into  existence  ?  Is  it  not  plain  to  everyone  that  the  enormous 
agricultural  advances  of  the  United  States  are  due  to  the 
diversification  of  the  pursuit  compelled  by  the  development 
of  innumerable  centers  of  manufacturing  industry?  And, 
therefore,  is  not  agriculture  the  beneficiary  of  the  protective 
system  rather  than  manufactures?  To  say  that  the  abund- 
ance of  land  is  the  cause  of  the  prosperous  condition  of  the 
American  workingman  is  as  idle  as  it  would  be  to  assert 
that  the  existence  of  a  reclaimable  desert  is  a  blessing  to 


484      PROTECTION  AND  PROGRESS 

the  country  owning  it.  There  are  plenty  of  nations  con- 
taining such  possessions,  but  the  ownership  of  them  has  not 
elevated  the  condition  of  the  workers. 

The  United  States  contains  large  areas  which  are  rapidly 
being  brought  under  cultivation  that  were  once  regarded 
as  desert.  The  application  of  water  to  these  at  one  time 
unfertile  regions  is  making  them  "blossom  as  the  rose." 
The  redemption  which  is  being  effected  by  the  agency  of 
water  in  these  hitherto  desert  regions  presents  a  close  an- 
alogy to  the  result  produced  by  protection  in  calling  into 
use  all  of  the  available  portions  of  our  vast  possessions. 
There  are  oases  in  all  deserts  and  their  soil  may  be  made  to 
produce  liberally,  but  it  requires  water  to  redeem  the  dry 
parts.  In  the  same  way  there  might  have  been  a  sporadic 
development  of  the  soil  and  resources  of  the  United  States 
had  a  policy  repressive  of  manufacturing  been  encouraged, 
but  it  required  the  mighty  stimulus  of  an  enormous  manu- 
facturing industry  to  promote  the  cultivation  of  the  whole 
of  our  immense  national  domain. 


CHAPTER  XX. 

EQUALIZATION  OF  CONDITIONS. 

THE  IMPORTANT  FUNCTION   PERFORMED  BY  PROTECTIVE  TAR- 
IFFS. 

Two  kinds  of  dearness — The  high  prices  resulting  from  scarcity  and 
those  due  to  a  higher  standard  of  living — Cheapness  responsible 
for  trade  depression  in  England — Smith's  recommendation  that 
the  luxuries  of  the  poor  should  be  taxed — The  incidence  of  Brit- 
ish taxation — A  protective  tariff  does  not  permanently  raise  the 
cost  of  the  protected  article  to  the  consumer — American  con- 
sumers enjoying  low  prices  in  the  face  of  high  duties — Effects 
of  the  protective  tariff  in  compelling  improvements  in  produc- 
tion— Consumption  increases  more  rapidly  in  protective  than 
in  free  trade  countries — The  free  trade  idea  that  protectionists 
aim  to  permanently  increase  prices — Trusts  can  only  be  ef- 
fectually curbed  under  a  protective  system — A  protective  tariff 
necessary  to  prevent  the  transfer  of  industries  to  cheap  labor 
countries — What  the  bounty  system  has  done  for  Germany  and 
the  consumer  of  sugar — Protection  as  a  regulator  of  produc- 
tion— The  necessity  of  equalizing  the  conditions  produced  by 
the  exemption  of  industries  from  taxation — The  cost  to  the 
British  taxpayer  of  forcing  external  trade — Enormous  increase 
of  naval  expenditure  with  no  corresponding  increase  of  British 
trade — The  income  tax  unjust  and  impolitic — The  moot  question 
whether  the  tariff  is  a  tax. 

In  the  preceding  chapter  evidence  was  adduced  to  show 
that  there  is  no  foundation  for  the  assumption  that  the 
cheapening  of  commodities  specially  benefits  the  producing 
classes.  It  was  also  shown  that  in  countries  of  relative 
dearness,  such  as  the  United  States,  the  lot  of  the  working- 
man  is  immeasurably  better  than  it  is  in  lands  where  cheap- 
ness prevails.     In  the  further  discussion  of  this  subject  it 

48s 


486         PROTECTION  AND  PROGRESS 

will  be  well  to  emphasize  the  fact  that  clearness  may  be  due 
to  two  different  causes,  or,  to  put  it  more  plainly,  there 
may  be  a  dearness  that  results  from  scarcity  or  one  due  to 
the  higher  plane  of  living  of  the  masses. 

In  countries  where  famine  sometimes  prevails  the  spec- 
tacle of  starving  multitudes  may  be  witnessed,  and  yet  a 
resort  to  the  ordinary  methods  by  which  the  general  level 
of  prices  is  ascertained  will  disclose  a  marvelous  cheapness 
of  all  products  except  such  as  constitute  the  food  of  the 
masses.  During  the  recent  famine  in  India  the  price  of 
most  commodities  and  of  personal  service  remained  sub- 
stantially the  same.  A  comparison  of  the  cost  of  living  in 
India  during  the  famine  period  with  that  in  the  United 
States  would  show  that  although  millions  were  dying  of 
hunger  in  the  former  country  a  man  with  a  fixed  income 
could  purchase  more  of  the  necessaries  of  life  than  he  could 
with  a  similar  revenue  in  this  country.  In  the  United  States 
it  has  been  shown  that  great  distress  has  at  times  existed  in 
the  midst  of  agricultural  plenty  and  while  the  prices  of  food 
and  other  products  were  excessively  low ;  and,  on  the  other 
hand,  general  prosperity  has  been  witnessed  during  eras 
of  high  prices  for  commodities  and  personal  services.  It 
may  also  be  noted  with  profit  that  the  condition  of  the  Eng- 
lish masses  was  much  better  during  the  period  when  the 
average  of  prices  was  higher  than  it  is  now.  These  facts 
make  a  serious  breach  in  the  cheap  loaf  argument  and  they 
have  attracted  much  attention  recently,  and  are  causing 
thinking  Englishmen  to  ask  whether  a  blunder  was  not 
made  in  removing  the  duty  from  corn. 

Lecky  on  this  point  remarks  that  "tTie  political  evil  of 
narrowing  the  basis  of  taxation  is  a  real  one,  and  even  in  its 
purely  economical  aspects  the  reaction  against  the  abuses 
of  the  old  fiscal  system  seems  to  have  been  carried  too  far. 
It  is  not  probable,"  he  says,  "that  a  single  loaf  of  bread 
was  made  cheaper  by  the  abolition  in  1869  of  the  shilling 
registration  duty  on  corn."    In  the  same  connection,  speak- 


EQUALIZATION  487 

ing  of  the  abolition  of  the  small  duty  on  coal  abolished  by 
the  London  County  Council,  he  tells  us  "there  is  no  reason 
to  believe  that  any  human  being  except  a  few  rich  coal 
owners  and  middlemen  derived  any  benefit  from  its  aboli- 
tion."* 

The  question  of  the  incidence  of  taxation  here  raised 
will  be  considered  later.  In  this  place  attention  is  merely 
directed  to  the  admission  that  the  removal  of  a  duty  by  no 
means  always  inures  to  the  benefit  of  the  productive  con- 
sumer, but  may  be  wholly  absorbed  by  the  middleman. 
That  this  result  followed  the  abandonment  of  the  protective 
policy  in  England  can  easily  be  demonstrated.  Reference 
to  the  index  numbers  of  Augustus  Sauerbeck  shows  that 
the  number  for  the  period  from  1843-52  was  eighty-two, 
while  that  for  the  years  1864-72  was  102.  Since  1872  there 
has  been  a  steady  decline,  the  number  for  1885-94  being 
sixty-nine  and  that  for  the  year  1894  sixty-three. 

By  general  consent  the  period  between  1850  and  1873 
is  regarded  as  the  most  prosperous  in  the  history  of  British 
industry.  Yet,  according  to  the  unimpeachable  testimony 
of  Sauerbeck,  during  the  twenty-three  years  mentioned 
prices  were  constantly  rising,  the  advance  over  those  ruling 
in  the  final  years  of  protection  in  England  being  nearly  20 
per  cent.  During  the  progress  of  this  upward  movement 
there  is  no  recorded  protest  or  complaint  of  English  work- 
ers. If  the  enhanced  prices  of  the  commodities  he  con- 
sumed affected  him  injuriously  he  was  evidently  uncon- 
scious of  the  fact.  But,  singularly  enough,  as  soon  as  prices 
of  commodities  began  to  decline  the  toilers  lifted  up  their 
voices.  The  loaf  was  certainly  growing  cheaper,  but  it 
was  becoming  more  and  more  difficult  to  obtain  the  pennies 
with  which  to  buy  it. 

About  the  middle  of  the  decade  1880  the  industrial 
trouble  became  so  acute  in  England  that  a  Royal  Commis- 

*Lecky,  Democracy  and  Liberty,  Vol.  I,  p.  159. 


488         PROTECTION  AND  PROGRESS 

sion  was  appointed  to  ascertain  the  causes  of  the  existing 
depression.  It  sat  several  years,  gathered  a  vast  quantity 
of  evidence  and  made  a  report  which  may  be  dealt  with 
elsewhere,  but  does  not  concern  us  here  further  than  to 
observe  that  the  dissidents  on  the  main  question,  which  was 
one  affecting  the  standards  of  money,  were  agreed  upon  one 
thing,  namely,  that  in  some  inscrutable  fashion  low  prices  of 
commodities  were  the  cause  of  the  depression.  There  was 
a  marked  difference  of  opinion  as  to  what  caused  the  low 
prices,  but  no  member  of  the  commission  undertook  to 
demonstrate  that  the  British  workingman  was  better  off  be- 
cause he  was  able  to  buy  such  articles  as  he  consumed  at 
an  average  cost  of  twenty  per  cent  less  than  he  could  dur- 
ing the  decade  beginning  in  1870.* 

It  is  remarkable  that  most  writers  whose  opinions  con- 
form to  those  of  the  Manchester  school  have  deliberately 
ignored  the  lesson  taught  by  this  advance  and  recession  of 
prices  and  the  attendant  circumstances.  It  is  the  more  puz- 
zling because  the  apostles  whose  theories  they  profess  to 
reverence  had  plainly  indicated  that  some  such  result  as  that 
told  by  the  story  of  the  index  numbers  and  the  researches 
of  the  Royal  Commission  must  logically  follow  the  adoption 
of  a  system  of  unrestrained  competition  and  a  resort  to  the 
fiscal  methods  advocated  by  Adam  Smith,  the  avowed  pur- 
pose of  which  was  to  make  the  toiler  bear  as  large  a  part  of 
the  burden  of  taxation  as  could  be  safely  imposed  upon  him. 
The  evasion  can  only  be  explained  by  assuming  that  the 
brutal  frankness  which  marked  the  discussion  of  economics 
in  Smith's  book  could  not  be  ventured  upon  in  these  days ; 
therefore,  writers  influenced  by  the  nineteenth  century  spirit 
which  has,  in  discussion  at  least,  compelled  recognition  of 
the  rights  of  the  worker,  have  deliberately  avoided  refer- 
ence to  the  showing  made  before  the  Royal  Commission,  and 
have  instead,  endeavored  to  make  the  eighteenth  century 


♦"Bimetallism  or  Monometallism,"  Young. 


EQUALIZATION  489 

views  of  Doctor  Smith  harmonize  with  nineteenth  century 
conditions.  Had  they  honestly  analyzed  the  evidence  pre- 
sented before  the  commission  they  would  have  seen  how 
completely  at  variance  recent  experience  is  with  teachings 
they  are  vainly  seeking  to  symmetrize. 

It  is  sheer  hypocrisy  to  attempt  to  make  the  modern 
workingman  believe  that  the  man  who  is  credited  with  the 
origination  of  the  free  trade  idea  was  inspired  by  the  desire 
to  elevate  the  condition  of,  the  masses.  Adam  Smith  lived 
in  a  period  when  the  toiler  was  regarded  as  little  better  than 
a  slave,  and  his  economic  ideas  ran  in  a  groove  which  pre- 
vented his  looking  forward  to  a  better  future  for  the  free 
workingman  than  that  of  a  perpetual  bondsman.  That  this 
does  not  misrepresent  Smith's  attitude  every  careful  student 
of  the  Scotchman's  work  will  admit.  Commenting  on  an 
opinion  expressed  by  another  cold-blooded  theorist  who 
thought  that  a  workingman  ought  at  least  to  be  permitted 
to  earn  enough  wages  to  bring  up  two  children  in  order  to 
propagate  the  species,  Smith  says:  "The  labor  of  an  able- 
bodied  slave,  the  same  author  adds,  is  computed  to  be  worth 
double  his  maintenance;  and  that  of  the  meanest  laborer, 
he  thinks,  cannot  be  worth  less  than  that  of  an  able-bodied 
slave.  Thus  far  at  least  it  seems  certain  that  in  order  to 
bring  up  a  family  the  labor  of  the  husband  and  wife  to- 
gether must,  even  in  the  lowest  species  of  common  labor, 
be  able  to  earn  something  more  than  what  is  precisely  neces- 
sary for  their  own  maintenance;  but  in  what  proportion, 
whether  in  that  above  mentioned,  or  in  any  other,  I  shall 
not  take  upon  me  to  determine."* 

The  careless  student  of  Smith  may  think  that  this  re- 
fusal to  determine  whether  the  reward  of  a  free  worker  in 
an  industrial  society  should  be  greater  than  that  of  a  slave 
is  merely  the  result  of  inability  to  decide  whether  under  any 
economic  system  it  would  be  possible  to  elevate  the  condi- 


*Smith,  Wealth  of  Nations,  Book  I,  Chap.  VIII. 


490        PROTECTION   AND   PROGRESS 

tion  of  the  masses,  but  there  are  too  many  other  passages 
showing  the  actual  workings  of  the  learned  doctor's  mind  to 
permit  anyone  to  labor  long  under  the  impression  that  he 
thought  there  should  be  other  beneficiaries  of  the  increase 
of  the  national  wealth  than  the  class  to  which  he  belonged. 
His  strictures  on  the  subject  of  trade  combinations  show 
the  trend  of  his  thought.  "People  of  the  same  trade,"  he  says, 
"seldom  meet  together  even  for  merriment  and  diversion, 
but  the  conversation  ends  in  a  conspiracy  against  the  public 
or  in  some  contrivance  to  raise  prices.  It  is  impossible,  in- 
deed, to  prevent  such  meetings  by  any  law  which  could  be 
executed  or  would  be  consistent  with  liberty  and  justice. 
But  though  the  law  cannot  hinder  people  of  the  same  trade 
from  sometimes  assembling  together,  it  ought  to  do  nothing 
to  facilitate  such  assemblages,  much  less  to  render  them 
necessary."* 

This  was  the  view  of  trades  unions  accepted  by  the 
early  Cobdenites.  Bright  and  Cobden  looked  upon  them 
just  as  Smith  did.  All  attempts  to  resist  the  inevitable 
presure  of  the  workingman  to  the  limit  of  subsistence  which 
attends  unrestrained  competition  was  regarded  as  a  con- 
spiracy against  the  public  welfare.  Labor  combination  in- 
terfered with  the  operation  of  a  law  calculated  to  keep 
workingmen  in  a  state  of  subjection ;  therefore  the  manufac- 
turer in  free  trade  England  was  heartily  opposed  to  trades 
unions.  It  is  sometimes  assumed  that  this  opposition  was 
not  purely  selfish,  but  was  due  to  the  belief  that  only  by  the 
laboring  classes  consenting  to  fiercely  compete  with  each 
other  for  the  opportunity  to  earn  a  living  could  production 
be  sufficiently  stimulated  to  meet  the  growing  wants  of  the 
human  race.  But  this  assumption  is  not  borne  out  by  the 
facts.  A  little  research  will  show  that  the  motives  which 
induced  the  peace-loving  Cobden  and  Bright  to  bitterly 
antagonize   legislation   preventing   young    children    being 

♦Smith,  Wealth  of  Nations,  Book  I,  Chap.  X. 


EQUALIZATION  491 

worked  to  death  in  factories  or  to  improve  the  sanitary  con- 
dition of  workshops  were  precisely  the  same  as  those  which 
operated  when  England  finally  elected  to  adopt  the  system 
of  taxation  recommended  by  Adam  Smith. 

Let  us  gather  from  Smith's  pages  his  views  on  the  sub- 
ject of  taxation  and  his  recommendations  regarding  its  in- 
cidence. First  let  us  consider  his  declaration  that  "the 
advanced  price  of  such  manufactures  as  are  real  neces- 
saries of  life,  and  are  destined  for  the  consumption  of  the 
poor,  of  coarse  woolens,  for  example,  must  be  compensated 
to  the  poor  by  a  further  advancement  of  their  wages.  The 
middling  and  superior  ranks  of  people,  if  they  understand 
their  own  interest,  ought  always  to  oppose  all  taxes  upon 
the  necessaries  of  life,  as  well  as  all  direct  taxes  upon  the 
wages  of  labor.  The  final  payment  of  both  one  and  the 
others  falls  altogether  upon  themselves,  and  always  with  a 
considerable  overcharge."* 

Does  this  advice  convey  any  other  impression  than  the 
one  we  assert  it  does?  Is  it  not  addressed  to  the  class  to 
which  Smith  belonged,  and  does  it  not  distinctly  show  that 
he  was  convinced  that  the  effects  of  unrestrained  competi- 
tion would  be  to  reduce  the  wages  of  labor  to  the  limit  of 
subsistence?  On  what  other  theory  can  his  assertion  that 
a  tax  on  the  workingman's  necessaries  must  be  borne  by  the 
superior  class  be  explained?  The  argument  designed  to 
show  that  the  workingman  has  some  luxuries  which  can  be 
reached  by  the  tax  gatherer  does  not  impair  the  force  of 
Smith's  conclusion,  for  he  makes  it  clear  that  the  luxuries  of 
the  workingman  which  he  has  in  mind  are  mainly  what  we 
would  today  call  necessaries.  "By  necessities  I  under- 
stand," says  Smith,  "not  only  the  commodities  which  are 
indispensably  necessary  for  the  support  of  life,  but  whatever 
the  custom  of  the  country  renders  it  indecent  for  creditable 
people,  even  of  the  lowest  order,  to  be  without."t 

*Smith,  Wealth  of  Nations,  Book  V,  Chap.  II. 
tibid,  Book  V,  Chap.  II. 


492        PROTECTION  AND  PROGRESS 

Therefore,  if  in  the  eager  struggle  for  life  in  England 
the  workingnian  consents  to  a  reduction  of  wages  which 
will  compel  his  class  to  abandon  the  use  of  any  of  the  things 
he  now  considers  indispensable  to  a  comfortable  existence 
the  things  abandoned  or  unattainable  cease  to  be  necessaries. 
If  we  conceive  of  the  British  workingman,  under  the  pres- 
sure of  foreign  competition,  foregoing  the  use  of  shoes 
made  of  leather  Smith's  definition  would  oblige  us  to  regard 
leather  shoes  as  a  luxury.  If  the  pressure  were  great  enough 
to  largely  increase  the  number  of  bare  backs  to  which  refer- 
ence is  made  by  Carlyle  shirts  would  have  to  be  put  in  the 
same  category,  for  general  disuse  of  such  articles  of  raiment 
would  render  it  decent  for  people  to  live  without  them. 
Finally,  it  may  be  assumed  that  if  no  resistance  were  offered 
by  the  workingman  his  condition  would  become  the  same 
as  that  of  the  slave  who  enjoys  no  luxury  except  by  permis- 
sion of  his  master  or  by  theft. 

When  these  facts  are  considered  we  are  appalled  by 
the  selfishness  of  the  suggestion  that  it  is  a  duty  which 
the  superior  and  middling  classes  owe  to  themselves  to  take 
care  to  attack  by  taxation  what  little  a  workingman  may,  by 
fortuitous  circumstances,  gain  beyond  his  mere  subsistence. 
This  is  what  Smith  deliberately  does.  "It  must  always  be 
remembered,"  he  says,  "that  it  is  the  luxurious  and  not  the 
necessary  expense  of  the  inferior  ranks  of  people  that  ought 
ever  to  be  taxed.  The  final  payment  of  any  tax  upon  their 
necessary  expense  would  fall  altogether  upon  the  superior 
ranks  of  people,  upon  the  smaller  portion  of  the  annual 
produce  and  not  the  greater.  Such  a  tax  must  in  all  cases 
either  raise  the  wages  of  labor  or  lessen  the  demand  for 
it."* 

The  superior  and  middling  ranks  in  England  since  1848 
have  consistently  followed  this  advice.  It  took  nearly  three- 
quarters  of  a  century  for  the  beneficiaries  of  the  system 


♦Smith,  Wealth  of  Nations,  Book  V,  Chap.  II. 


EQUALIZATION  493 

to  convince  the  masses  that  the  poHcy  of  excusing  the  rich 
consumer  from  taxation  was  to  their  interest,  but  the  diffi- 
cult task  was  finally  accomplished  by  dangling  the  cheap 
loaf  before  the  eyes  of  the  workingman.  Since  that  time 
things  consumed  by  the  poorer  classes  which  Smith's  elastic 
definitions  make  luxuries  are  made  to  bear  half  of  the 
burden  of  English  taxation,  and  as  he  tells  us  positively  that 
"taxes  upon  such  consumable  goods  as  are  articles  of  luxury 
are  all  finally  paid  by  the  consumer,"  we  have  presented  to 
us  the  extraordinary  spectacle  of  that  ninety  per  cent  of 
the  population,  which  enjoys  only  ten  per  cent  of  all  the 
revenues  of  the  United  Kingdom,  paying  a  greater  propor- 
tion of  the  taxes  than  the  one-tenth  who  manage  to  secure 
nine-tenths  of  all  the  revenues. 

The  injustice  of  such  a  system  is  not  only  disguised  by 
the  free  trader,  but,  singularly  enough,  by  disregarding  the 
teachings  of  the  apostle  he  professes  to  reverence  he  has 
managed  to  make  the  weak  of  intellect  believe  that  a  tax  on 
the  necessaries  of  life  can  be  extracted  from  the  working 
classes.  One  of  the  most  widely  employed  arguments  of 
the  free  trader  in  the  United  States  is  that  the  tariff 
on  the  commoner  articles  consumed  by  the  working 
classes  inflicts  a  peculiar  hardship  on  them.  No  free  trader, 
however,  seems  to  be  conscious  of  the  fact  that  in  making 
a  contention  of  this  kind  he  is  flying  in  the  face  of  Smith's 
axiom  that  "whatever  raises  the  prices  of  necessary  articles 
of  subsistence  must  necessarily  raise  wages."  And  rarely  do 
we  find  one  with  sufficient  perception  to  discover  the  cause 
of  the  admittedly  superior  condition  of  the  American  work- 
ingman in  the  fact  that  the  tariff  system  of  the  United  States 
is  so  constructed  that  the  burden  falls  upon  those  classes 
best  able  to  bear  it. 

Before  the  repeal  of  the  English  corn  laws  the  duties  in 
Great  Britain  were  so  regulated  that  the  rich  man  was  com- 
pelled to  pay  for  the  privilege  of  using  foreign  luxuries. 
Smith  tells  us  that  in  his  day  "the  duties  upon  foreign  lux- 


494        PROTECTION  AND  PROGRESS 

uries  imported  for  home  consumption,  though  they  some- 
times fell  upon  the  poor,  fell  principally  upon  people  of 
middling  or  more  than  middling  fortune."*  This  continued 
to  be  the  case  in  England  until  some  years  after  the  British 
had  become  indoctrinated  with  the  idea  that  free  trade  was 
the  source  of  all  their  prosperity,  when  advantage  was  taken 
of  the  erroneous  impression  to  remove  the  duty  from  the  ma- 
jor part  of  the  articles  which  might  fairly  be  characterized  as 
the  luxuries  of  the  rich  and  shifted  to  those  things  which 
were  mainly  consumed  by  the  poor  and  could  only  be  re- 
garded as  luxuries  under  a  strained  definition,  such  as  that 
furnished  by  Smith,  which  excludes  from  the  list  of  neces- 
saries everything  that  is  not  absolutely  indispensable  to  the 
propagation  of  the  species. 

The  evil  effects  of  the  change  were  not  at  first  noticed 
by  the  British  masses.  They  permitted  themselves  to  share 
the  common  belief  that  the  great  prosperity  of  the  United 
Kingdom  was  due  to  the  removal  of  the  corn  duties,  when, 
in  fact,  it  was  owing,  as  is  now  clearly  recognized  by  many 
economists  and  publicists,  to  the  practical  monopoly  of  man- 
ufactures which  Great  Britain  enjoyed  for  several  years 
after  the  free  trade  innovation.  As  soon,  however,  as  this 
advantage  was  neutralized  by  the  adoption  of  protective 
tariffs  by  foreign  countries  it  began  to  be  noted  that  while 
the  national  wealth  of  Great  Britain  had  enormously  in- 
creased there  was  no  diminution  of  the  number  of  unem- 
ployed, and  that  the  ranks  of  the  submerged  class  were  con- 
tinually being  recruited  by  displaced  workingmen  and  by 
toilers  who,  after  eking  out  a  precarious  existence,  har- 
assed during  the  most  of  their  lives  by  the  fear  of  being 
unable  to  obtain  work,  were  at  last  compelled  to  take  refuge 
in  the  workhouse  or  accept  what  the  British  euphemistically 
term  outdoor  relief. 

It  is  a  feature  of  economics  that  while  an  evil  may  be 
plainly  recognized  by  many,  and  its  existence  is  generally 

♦Smith,  Wealth  of  Nations,  Book  I,  Chap.  VIII. 


EQUALIZATION  495 

felt,  it  is  nearly  impossible  for  those  suffering  most  to  arrive 
at  an  agreement  respecting  the  cause.  This  difficulty  has 
been  intensified  in  England  by  the  propensity  of  the  school 
writers  who  are  attempting  to  perpetuate  the  views  of 
Cobden  to  substitute  theory  for  fact.  With  glittering 
phrases  they  confuse  the  vulgar  mind  and  then  in  turn 
become  confused  themselves.  They  tell  the  English  work- 
ingman  of  the  benefits  of  the  cheap  loaf,  and  when  the  toiler 
points  to  a  country  where  the  loaf  is  nominally  high  but  the 
laborer  is  infinitely  more  prosperous  they  tell  him  that  the 
prosperity  he  sees  is  due  to  the  abundance  of  land.  Incon- 
sistently enough,  after  having  demonstrated  to  their  owjn 
satisfaction  that  the  superior  condition  of  the  American 
workingman  is  assignable  to  that  cause,  they  proceed  to  show 
that  the  admitted  prosperity  does  not  actually  exist  and 
that  the  high  wages  of  American  workingmen  are  merely 
nominal ;  that  owing  to  the  operation  of  the  high  protective 
tariff  the  lower  paid  labor  of  England  and  other  foreign 
countries  is  really  better  rewarded  than  that  of  the  United 
States. 

It  would  seem  impossible  for  rational  writers  to  argue 
that  the  workingmen  of  the  United  States  are  infinitely 
more  prosperous  than  those  of  any  other  country  and  at  the 
same  time  assert  that  they  are  worse  off  than  the  English 
and  other  foreign  workers  because  prices  are  higher  in 
America  than  in  Europe,  but  the  exigencies  of  the  discus- 
sion demand  that  they  should  do  so.  Adam  Smith  wrote 
"that  every  tax  is  to  the  person  who  pays  it  a  badge  not  of 
slavery,  but  of  liberty,"*  because  it  denotes  that  the  person 
paying  it  is,  although  a  subject  to  government,  as  he  has 
some  property  he  cannot  be  the  property  of  a  master.  Dis- 
regarding this  truism,  Cobdenites  diligently  seek  to  make 
all  taxation  odious.  Instead  of  teaching  that  in  a  country 
where  the  Government  exists  by  the  voluntary  consent  of 
the  governed  taxation  is  merely  a  device  by  which  funds  are 

*Smith,  Wealth  of  Nations,  Book  I,  Chap.  VIII. 


496        PROTECTION   AND   PROGRESS 

raised  for  keeping  in  motion  the  machinery  of  society,  they 
invent  shibboleths  which  are  designed  to  confuse  the  minds 
of  the  thoughtless  and  divert  attention  from  the  incidence  of 
taxation. 

In  the  United  States  the  phrase  "the  tariff  is  a  tax"  has 
been  cunningly  employed  by  free  traders  to  obscure  the 
vital  question,  which  is :  Upon  whom  does  the  tax  fall  ? 
Utterly  disregarding  the  teachings  of  the  economists  of 
their  own  school,  they  have  sought  to  create  the  impression 
in  the  mind  of  the  workingman  that  the  imposition  of  a 
tariff  on  the  articles  of  necessity  consumed  by  him  is  a 
grievous  burden.  We  have  seen  that  Smith  teaches  that 
"whatever  raises  the  average  price  of  necessaries  must  nec- 
essarily raise  wages."  This  ought  to  conclusively  dispose 
of  the  contention  that  the  American  workingman  could  be 
injured  if  the  effect  of  a  tariff  on  the  necessaries  consumed 
by  him  was  to  really  raise  the  price  of  the  articles  consumed, 
but,  as  a  matter  of  fact,  a  protective  tariff  does  not  operate, 
except  temporarily,  in  the  manner  indicated  by  the  free 
trader. 

The  question  whether  a  high  rate  of  duty  is  beneficial 
or  otherwise  to  the  workingman  can  only  be  determined  by 
ascertaining  whether  the  money  derived  from  its  imposi- 
tion is  properly  applied,  how  much  of  it  he  is  called  upon  to 
pay,  and  his  ability  to  bear  his  part  of  the  burden  without 
being  forced  to  the  limit  of  subsistence.  To  the  working- 
man  who  takes  these  things  into  consideration  the  shibbo- 
leth "the  tariff  is  a  tax"  has  no  terrors.  If  he  asks,  and  is 
answered  in  the  affirmative,  that  the  money  raised  by  the 
tariff  tax  is  to  be  applied  to  securing  a  proper  administration 
of  the  Government  he  will  conclude  that  a  system  which  does 
not  bring  him  in  personal  contact  with  the  taxgatherer  is, 
on  the  whole,  more  desirable  than  any  other.  If  he  pursues 
his  investigations  further  and  discovers,  as  he  will  undoubt- 
edly, if  he  examines  the  details  of  the  imports  under  an 
American  tariff,  that  by  far  the  largest  part  of  the  articles 


EQUALIZATION  497 

brought  into  the  country  from  foreign  lands  upon  which  a 
protective  duty  is  laid  are  consumed  by  the  rich,  he  will 
conclude,  following  the  idea  of  Adam  Smith,  that  as  "taxes 
upon  such  consumable  goods  as  are  articles  of  luxury  are  all 
finally  paid  by  the  consumer,"  the  adjustment  of  the  burden 
is  a  fair  one.  Finally  he  will  determine  that  a  protective 
tariff  does  not  really  touch  him  closely  because  under  no 
circumstances  does  it  have  the  effect  described  by  the  free 
trader  of  permanently  raising  the  price  of  goods  to  the  con- 
sumer. 

That  in  the  initial  stages  of  the  protection  of  any  par- 
ticular article  or  class  of  articles  the  effect  must  be  to  raise 
the  price  goes  without  saying.  If  the  conditions  were  such 
that  the  thing  protected  could  be  as  cheaply  produced  as 
in  the  country  it  was  imported  from  there  would  be  no 
demand  for  protection.  The  failure  to  recognize  the  fact 
that  the  condition  which  existed  when  the  protective  duty 
was  first  imposed  may  be  completely  changed  by  the  act  of 
protection  is  responsible  for  the  grotesque  blunder  into 
which  most  free  traders  have  fallen  of  assuming  that  the 
existence  of  a  paragraph  in  a  tariff  schedule  must  neces- 
sarily affect  the  price  of  such  articles  in  the  protected  coun- 
try. That  the  imposition  of  a  duty  may  raise  the  price  of 
the  imported  article  in  the  country  in  which  it  is  consumed 
is  not  denied.  That  it  almost  invariably  does  so  in  the  be- 
ginning is  freely  admitted.  That  it  ceases  to  do  more  than 
guard  against  the  breaking  down  of  the  home  market,  in 
the  manner  described  by  Jeans,  after  an  industry  has  been 
thoroughly  developed  in  a  country  of  great  resources,  such 
as  the  United  States,  is  easily  demonstrable,  and  the  evi- 
dence to  support  the  demonstration  may  be  wholly  drawn 
from  British  sources. 

Let  us  take  the  history  of  the  iron  industry  in  the  United 
States  and  see  what  light  it  throws  on  this  phase  of  the 
discussion.  It  is  not  necessary  to  sketch  in  detail  the  ups 
and  downs  which  attended  its  development;  here  we  only 

32 


498         PROTECTION   AND   PROGRESS 

need  refer  to  the  fact  that  when  a  really  effective  tariff  was 
first  imposed  on  iron  and  steel  its  result  was  undoubtedly 
to  increase  the  price  of  those  articles  to  the  American  con- 
sumer, although  this  admission  must  be  modified  by  a  ref- 
erence to  the  figures  of  production,  consumption  and  prices 
presented  elsewhere,  which  show  conclusively  that  when 
Great  Britain  enjoyed  a  practical  monopoly  of  this  partic- 
ular industry  an  increased  demand  from  the  United  States 
was  always  a  signal  for  an  advance  in  prices,  such  advances 
amounting  to  over  lOO  per  cent  in  brisk  years  as  compared 
with  dull  ones.* 

But  disregarding  this  testimony  and  confining  ourselves 
to  such  a  showing  as  a  comparison  of  the  price  lists  of  Eng- 
land and  the  United  States  affords,  we  find  that  for  several 
years  the  range  of  prices  was  higher  in  the  protected  than 
in  the  free  trade  country.  But  this  significant  fact  must  be 
noted,  that  the  difference  in  the  price  after  the  American 
industry  was  once  firmly  established  ceased  to  be  as  great 
as  the  rate  of  the  protective  duty,  and  that  it  kept  dimin- 
ishing in  something  like  the  same  ratio  as  the  progress  of 
iron  manufacture,  until  finally,  in  the  case  of  many  articles, 
notably  pigiron  and  rails,  there  ceased  to  be  any  margin  of 
enhancement  of  price  which  could  be  attributed  to  the  duty. 

This  statement  is  indisputable,  because  it  is  supported 
by  an  overwhelming  array  of  admissions  from  English 
authorities  and  by  price  lists  and  comments  of  the  trades 
journals  of  Great  Britain  and  the  United  States.  From  the 
former  a  few  excerpts  will  show  how  great  is  the  change 
in  conditions  between  the  time  when  duties  were  imposed 
to  call  the  iron  industry  into  existence  and  to-day,  when  they 
are  maintained  merely  to  assure  to  American  manufactur- 
ers the  retention  of  the  home  market  by  making  impossible 
the  inroads  of  foreign  syndicates  desirous  of  dumping  their 
surplus  products  on  us  so  as  to  relieve  their  own  market 

*See  Chap.  VIII. 


EQUALIZATION  499 

from  the  effects  of  the  disturbance  caused  by  overproduc- 
tion. 

A  paragraph  from  a  recent  number  of  the  London  Iron 
cDtid  Coal  Trades  Review  epitomizes  the  situation  in  the 
American  iron  industry  admirably.  The  writer  says:  "It 
is,  perhaps,  only  natural  that  in  view  of  the  much  higher 
wages  that  they  have  to  pay  their  workmen  the  American 
iron  and  steel  manufacturers  should  desire  to  have  a  cer- 
tain measure  of  protection  against  an  invasion  of  the  prod- 
ucts of  countries  which,  like  Germany,  cost  little  more  than 
one-third  of  the  amount  expended  in  the  item  of  labor.  But 
even  this  is  not  the  full  extent  of  the  difference,  for  Mr. 
Stirling  also  informed  the  Tariff  Committee  that  at  the 
Joliet  Steel  Works — one  of  the  chief  works  carried  on  by 
the  Illinois  Steel  Company — it  requires  4I  tons  of  raw 
material  to  produce  a  ton  of  steel  rails,  and  these  raw 
materials  had  to  be  hauled  an  average  of  412  miles,  at  an 
average  rate  of  8s  4^6.  per  ton  for  freight,  or,  taking  the 
freight  of  the  whole  quantity,  it  amounted  to  39s  8d  per 
ton  of  steel  rails.  And  yet  the  American  works  are  now, 
or  were  quite  recently,  selling  steel  rails  at  about  £4  los  per 
ton.  English  steel  manufacturers  are  entitled  to  ask  how  it 
is  done.  Will  some  American  manufacturer  kindly  supply 
the  needed  light?"*  In  another  issue  the  journal  quoted 
from  above  said :  "Pittsburg  iron  and  steel  makers  do  not 
enjoy  much  advantage  over  our  own  so  far  as  the  cost  of 
iron  ores  is  concerned  owing  to  the  greater  distance  over 
which  the  ores  have  to  be  transported.  Speaking  generally, 
the  cost  of  producing  a  ton  of  Bessemer  or  hematite  iron 
today  will  only  amount  to  about  37s  6d  at  Pittsburg,  against 
49s  6d  in  Great  Britain  (in  the  Cleveland  district — on  the 
west  coast  the  cost  will  be  several  shillings  more),  52s  3d 
in  Westphalia,  53s  in  Belgium,  and  57s  9d  in  France." 

To  this   evidence   we  may  add   some   extracts   from  a 

*Iron  and  Coal  Trades  Review,  London,  June,  1898. 


500         PROTECTION  AND  PROGRESS 

resume  of  the  condition  of  the  iron  and  steel  industry  in  the 
United  States  in  1897,  based  on  statements  made  in  an  inter- 
view with  a  veteran  manufacturer,  who  briefly  reviewed  the 
progress  of  the  past  few  years  in  this  particular  field.  "Steel 
rails,"  said  the  speaker,  "were  first  turned  out  in  this  country 
in  1867  and  brought  $160  a  ton.  In  less  than  six  years  the 
cost  was  scaled  down  to  $90  a  ton,  one  mill  producing  30,000 
tons  a  year.  The  producing  capacity  was  further  augmented 
until  50,000  tons  had  been  reached  in  one  year,  which  figure 
at  the  time  was  considered  marvelous.  At  the  present  time 
there  are  mills  that  can  roll  more  rails  in  a  month  than  any 
one  mill  in  this  country  could  produce  in  a  year  a  quarter  of 
a  century  ago,  and  that,  too,  with  the  aid  of  much  less  help. 
Less  than  one-third  of  the  number  of  workmen  are  now  re- 
quired for  a  given  output  of  rails  than  were  needed  twenty 
years  ago."  These  figures  are  supplemented  by  others  which 
show  that  in  1871  the  duty  on  steel  rails  amounted  to  $28  a 
ton  and  the  average  price  per  ton  was  $102.50.  "When  it  is 
stated  that  steel  rails  sold  for  export  last  year  (1897)  at  $16 
per  ton  the  extent  of  the  transition  is  at  once  obvious."  The 
commentator  then  goes  on  to  explain  that  "a  number  of 
factors  have  combined  to  bring  about  these  changes.  Chief 
among  them  may  be  mentioned  the  cheapened  rates  of  trans- 
portation, low  priced  ore  and  improved  methods  of  produc- 
tion in  the  form  of  mechanical  devices  which  have  replaced 
hand  labor."* 

Before  proceeding  to  answer  the  question  which  this  con- 
dition of  affairs  has  induced  the  free  trader  to  ask  it  may  be 
well  to  revert  to  a  statement  made  by  Rogers  in  the  hey-dey 
of  British  manufacturing  prosperity:  "Protection,"  he 
said,  "suppresses  all  kinds  of  improvements,  and,  indeed, 
it  does  not  appear  that  the  phenomenon  of  sudden  vast  and 
permanent  progress  has  ever  been  witnessed  in  economic 
history  except  during  the  latter  half  of  the  eighteenth  cen- 

♦Bradstreet's,  February  26,  1898. 


EQUALIZATION  501 

tury  in  England."*  With  the  latter  part  of  the  statement  we 
shall  not  deal  here,  but  a  writer  advocating  an  economic  sys- 
tem whose  underlying  purpose  is  the  elimination  of  waste  in 
processes  of  production  cannot  avoid  calling  attention  to 
Professor  Rogers'  absurd  misapprehension  of  the  workings 
of  a  policy  which  other  thinkers  have  acknowledged  virtually 
compels  improvement.  The  history  of  the  iron  and  steel 
industry  in  the  United  States  demonstrates  that  protection 
stimulates  improvement  in  every  possible  direction,  in  the 
creation  of  labor-saving  devices,  in  the  bettering  of  methods 
of  transportation  and  in  other  ways  too  numerous  to  mention 
here,  but  the  effects  of  which  are  so  obvious  that  the  shifty- 
free  trader,  forgetting  his  original  prediction  that  a  high  tar- 
iff would  necessarily  result  in  preventing  improvement  and 
repressing  development,  has  gone  to  the  other  extreme  and 
urges  that  the  undue  stimulus  of  high  tariffs  is  responsible 
for  overproduction. 

It  would  be  a  waste  of  words  to  dwell  at  length  on  the 
inconsistency  involved  in  these  opposing  contentions,  but  it 
may  not  be  amiss  to  call  attention  to  the  fact  that  it  is  now 
recognized  that  production  can  be  more  effectually  regulated 
within  the  restricted  area  of  a  country  with  a  protective  tariff 
than  in  one  dependent  upon  the  whole  world  for  a  market. 
The  secretary  of  the  British  Iron  and  Steel  Institute  has 
freely  admitted  this  to  be  the  case,t  but  if  he  had  not  done 
so  there  is  abundant  evidence  showing  that  England  at  a 
time  when  the  world's  consumption  of  iron  was  much  less 
than  it  is  at  present  was  frequently  overstocked  with  that 
article  to  such  an  extent  as  to  break  the  market.  It  was  de- 
veloped during  an  inquiry  made  by  a  British  Royal  Commis- 
sion into  the  causes  of  depression  in  England  that  in  1884 
the  carryover  stock  of  pig  iron  was  1,809,947  tons,  an  in- 

♦Rogers,  Article  "Free  Trade,"  Ency.  Brit. 

fjeans,    Supremacy    in    the    Iron    Market,    Engineering    Magazine, 
December,  1897. 


502         PROTECTION  AND  PROGRESS 

crease  of  nearly  eighty  per  cent  over  the  surplus  of  1879.* 
The  writer  calling  attention  to  this  fact  also  dwelt  on  the  ex- 
cessive overproduction  of  ships,  saying  that  the  consequences 
were  "seen  in  the  laying  up  of  vessels  for  want  of  cargoes ; 
in  the  heavy  fall  of  dividends  on  shipping  shares  and  cessa- 
tion in  some  cases ;  in  excessively  low  freights ;  in  the  dis- 
tress of  our  shipping  ports,  where  59,200  persons  were  at 
work  last  year  (1885)  instead  of  94,700  as  in  1883;  and  in 
the  want  of  employment  for  our  immense  riverside  popula- 
tion in  the  metropolis  generally." 

It  would  be  idle  in  the  face  of  such  evidence  to  attribute 
to  the  free  trade  system  a  virtue  it  does  not  possess  or  to 
assume  that  unrestricted  trade  intercourse  must  necessarily 
have  the  effect  of  increasing  the  consumptive  ability  of  the 
world  to  such  an  extent  that  overproduction  would  be  im- 
possible. There  is  no  fact  better  assured  than  that  consump- 
tion is  on  a  much  more  restricted  scale  in  countries  where  no 
attempt  is  made  to  levy  protective  duties  than  in  those  where 
the  policy  of  protection  prevails;  therefore,  it  is  absurd  to 
claim  that  there  would  have  been  a  larger  demand  for  iron 
and  other  commodities  if  free  trade  had  prevailed,  and  that 
consequently  there  would  always  have  been  an  effective 
demand  for  all  the  iron  and  other  articles  that  could  be  manu- 
factured under  that  system. 

As  has  been  fully  demonstrated  elsewhere,  overproduc- 
tion is  chiefly  due  to  the  rapid  improvement  of  processes  of 
manufacture,  tillage  and  transportation  and  the  failure  of 
the  existing  methods  of  distribution  to  adjust  themselves  to 
the  changed  circumstances.  The  working  classes  have  not 
been  permitted  to  enjoy  their  full  share  of  the  advantages 
derived  from  new  inventions,  and,  therefore,  cannot  furnish 
sufficient  patronage  to  effectively  consume  the  increased  pro- 
duction.    If  the  man  in  the  enjoyment  of  an  income  of  a 


*Goodby,  prize  essay  on  the  Causes  of  Depression,  London,  1885. 
Pears. 


EQUALIZATION  503 

hundred  thousand  dollars  annually  could  be  supplanted  by  a 
hundred  men  earning  a  thousand  dollars  each  there  would  be 
a  remarkable  change  in  this  particular.  There  might  be  a 
diminution  of  the  demand  for  certain  very  costly  luxuries, 
but  the  necessities  of  a  hundred  persons  with  an  annual  in- 
come of  a  thousand  dollars  each  would  increase  the  demand 
for  staple  commodities  a  hundredfold,  or  very  nearly  in  that 
proportion. 

Until  such  a  change  in  distribution  is  effected  a  necessity 
for  the  intervention  of  a  protective  tariff  will  exist.  Mr. 
Jeans,  who  has  furnished  an  admirable  reason  for  the  reten- 
tion of  the  protective  policy  by  pointing  out  that  manufac- 
turers invariably  seek  to  avert  the  consequences  of  overpro- 
duction by  dumping  their  surplus  upon  foreign  countries  in 
order  to  preserve  prices  in  the  home  market,  ignores  his  own 
argument  when  he,  parrot  like,  repeats  the  stale  contention 
of  the  Cobdenites  that  "protection  does  not  protect."  He 
tells  his  readers  that  "American  practice  has  confounded  the 
wisdom  of  those  who  have  hitherto  argued  that  nominally 
cheap  labor  is  needed  to  secure  an  absolutely  cheap  product," 
and  that  "it  has  equally  upset  the  old-fashioned  ideas  about 
the  effect  of  protection  favoring  the  producer  at  the  expense 
of  the  consumer.  No  doubt,"  he  says,  "under  ordinary  cir- 
cumstances and  in  the  infancy  of  an  industry  this  result  hap- 
pens. It  may  also  happen,  and  remain,  after  an  industry  has 
been  fully  developed  when  the  conditions  are  not  favorable  to 
cheap  production  as  a  result  of  internecine  competition.  It 
has  happened,  also,  and  will  probably  happen  again  as  the 
result  of  artificial  interference  with  the  free  play  of  competi- 
tion between  the  works  established  in  the  country  whose 
industries  are  supposed  to  be  protected.  But  over  a  wide 
range  of  industrial  operations  protection  does  not  protect, 
and  this  paradox  was  never  more  clearly  apparent  than  in  the 
existing  condition  of  the  American  industry.  For  that  indus- 
try at  least  the  United  States  require  the  shackles  of  protec- 


504        PROTECTION  AND  PROGRESS 

tion  no  longer.  I  am  disposed  to  doubt,"  he  adds,  "whether 
the  same  remark  is  equally  true  of  European  countries."* 

An  analysis  of  this  expression  of  opinion  discloses  how 
differently  the  policy  -of  protection  is  regarded  by  English 
free  trade  writers  and  American  protectionists.  The  latter 
assume  that  if  the  effects  of  the  system  are  such  as  those 
described  by  Jeans ;  if  protection  results  in  creating  a  great 
industry  and  does  not  favor  the  producer  at  the  expense  of 
the  consumer,  it  has  performed  all  that  may  be  reasonably 
expected  of  it.  But  Mr.  Jeans  approaches  the  subject  from 
another  standpoint.  He  accepts  as  true  the  absurd  charge 
that  the  protective  tariff  in  the  United  States  is  wholly  due 
to  the  machinations  of  manufacturers  and  that  its  sole  pur- 
pose is  to  raise  the  price  of  goods  so  that  they  may  benefit, 
and  when,  after  investigation,  he  discovers  that  domestic 
competition  has  operated  to  reduce  prices  to  a  lower  level 
than  those  of  free  trade  England  he  remarks  "over  a  wide 
range  of  industrial  operations  protection  does  not  protect."" 

But,  as  we  have  pointed  out,  elsewhere  in  this  article  he 
distinctly  proves  that  protection  does  protect  even  under  the 
circumstances  he  indicates,  for  the  tariff  enables  the  Amer- 
ican manufacturer  to  hold  the  home  market  and  thus  permits 
him  to  give  his  employes  better  wages  and  more  regular  em- 
ployment than  is  possible  in  countries  like  England,  where 
the  territory  of  the  iron  workers  may  be  invaded  at  any  time 
by  the  producers  of  other  countries  when  they  wish  to  relieve 
themselves  of  a  surplus  without  affecting  prices  in  their  own 
markets. 

Mr.  Jeans,  clever  as  he  is,  is  not  exempt  from  the  com- 
mon blunder  of  the  Manchester  school.  He  attributes  ob- 
jects and  motives  to  protectionists  of  which  they  are  wholly 
innocent.  Doubtless  the  purpose  of  the  manufacturer  who 
appears  before  a  Congressional  Committee  and  makes  repre- 


♦Jeans,  Supremacy  in  the  Iron  Market,  Engineering  Magazine,  De- 
cember,  1897. 


EQUALIZATION  505 

sentations  to  influence  the  placing  of  a  J)rotective  duty  on 
some  particular  article  is  to  enable  him  to  produce  and  sell 
the  thing  protected  at  a  price  which  will  permit  him  to  make 
a  profit.  But  that  the  country  deliberately  proposed  at  any 
time  to  make  products  dear  so  as  to  benefit  the  manufacturer 
at  the  expense  of  the  consumer  is  an  absurdity  that  could 
only  suggest  itself  to  a  mind  saturated  with  the  errors  of 
Cobdenism. 

There  is  nothing  clearer  than  the  fact  that  intelligent 
American  protectionists  always  looked  forward  to  the  result 
to  which  Mr.  Jeans  refers.  They  foresaw  that  internal  com- 
petition would  effectually  reduce  the  prices  of  all  staple  com- 
modities. They  had  no  doubt  about  the  extent  of  the  re- 
sources of  the  country  and  its  future  growth.  It  is  a  matter 
of  record  that  many  able  protectionists  predicted  what  has 
since  come  to  pass,  that  one  day  the  United  States,  as  a  result 
of  the  stimulus  to  home  industries,  would  produce  and  con- 
sume more  of  the  great  staples  than  the  whole  world  did  at 
the  time  they  made  their  prophecies.  There  were  some  who 
were  even  rash  enough  to  predict  that  the  United  States 
would,  if  all  her  resources  were  called  into  play,  surpass  in 
the  magnitude  of  her  manufacturing  enterprises  the  nation 
which,  at  the  time  the  predictions  were  made,  was  unques- 
tionably supreme  in  industry.  How  well  these  prophecies 
were  fulfilled  may  be  inferred  from  the  fact  that  in  1840  the 
products  of  manufactures  of  the  whole  world  were  valued  at 
only  £1,215,000,000,  while  in  1894  the  values  of  the  manufac- 
tured products  of  the  United  States  alone  aggregated 
£1,952,000,000.* 

If  with  a  production  of  this  magnitude  the  consumers  of 
the  United  States  are  compelled  to  pay  high  prices  the  fact 
cannot  be  attributed  to  the  operation  of  the  protective  tariff, 
but  rather  to  the  tendency  of  capital  to  combine  and  to  abuse 
the  advantages  derived  from  combination.    There  is  not  the 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


5o6         PROTECTION  AND  PROGRESS 

slightest  reason  to  believe  that  this  tendency  would  be  abated 
if  our  ports  were  thrown  wide  open  to  foreigners.  Exper- 
ience has  demonstrated  that  combinations  for  the  purpose  of 
controlling  the  industries  of  several  countries  can  be  formed 
as  easily  as  within  a  restricted  area.  On  the  very  day  this 
paragraph  was  written  a  dispatch  was  published  in  the  Amer- 
ican papers  which  contained  an  item  from  the  St.  James  Ga- 
zette of  London  detailing  the  formation  of  an  Anglo-Amer- 
ican needle  trust.  "It  is  reported  on  the  Stock  Exchange," 
said  the  dispatch,  "that  an  Anglo-American  trust  to  control 
the  output  and  sale  of  sewing  machine,  knitting  machine  and 
all  other  kinds  of  needles  is  being  formed.  Several  American 
and  Midland  firms  are  reported  to  have  sold  their  business 
to  the  combination.  The  capital,  it  is  further  announced, 
will  be  $7,500,000."* 

No  one  familiar  with  the  subject  will  doubt  the  feasibil-* 
ity  of  the  project,  and  it  is  not  probable  that  anyone  will  ven- 
ture to  assert  that  there  is  anything  in  the  principle  of  laissez 
faire  opposed  to  such  combinations.  On  the  contrary,  Rogers 
and  other  free  traders  distinctly  affirm  that  they  are  beneficial 
inasmuch  as  they  reduce  the  cost  of  producing  by  saving  un- 
necessary expenditures  in  various  ways,  and  that  any  at- 
tempts on  the  part  of  the  promoters  to  take  advantage  of  the 
situation  produced  by  an  agreement  to  combine  would  result 
in  calling  into  existence  fresh  rivals. 

The  fallacy  of  this  argument  has  been  exposed  in  the 
chapter  on  trusts ;  here  the  purpose  is  to  direct  attention  to 
the  fact  that  protectionists  have  in  their  hands  a  weapon 
which  may  be  employed  against  combinations  whenever 
they  menace  the  public  welfare.  Their  adherence  to  the  be- 
lief that  it  is  wise  to  prevent  unrestricted  competition  makes 
the  advocates  of  protection  ready  to  resort  to  the  remedy  of 
control.  The  method  of  most  effectually  accomplishing  this 
result  has  not  yet  been  hit  upon,  but  that  it  will  be  found  no 

♦Associated  Press  Cable  Dispatch  to  American  Press,  Aug.  30,  1898. 


EQUALIZATION  507 

one  who  knows  that  the  underlying  motive  of  American  pro- 
tectionists is  to  defend  the  working  producer  from  the  ag- 
gressions of  capital,  whether  foreign  or  domestic,  will  for  a 
moment  doubt.  It  is  possible  that  more  stringent  regulations 
of  immigration  may  be  necessary  so  as  to  prevent  the  im- 
portation of  contract  laborers ;  or  the  course  adopted  by  Can- 
ada of  denying  protection  to  any  article  the  manufacture  of 
which  is  monopolized  by  a  combination  may  be  imitated ;  or 
some  scheme  of  graduated  taxation  may  be  devised  to  effect 
this  object,  but  that  the  evil  will  finally  be  effectually  con- 
trolled is  certain. 

It  was  the  conviction  that  it  would  be  impossible  for  a 
people  with  an  insufficient  capital  to  successfully  compete 
with  the  established  manufacturing  industries  of  wealthy 
countries  and  not  hostility  to  the  principle  of  competition 
that  led  Americans  to  adopt  the  protective  policy.  In  order 
to  create  a  domestic  manufacturing  industry  the  American 
people  cheerfully  made  sacrifices.  They  willingly  paid  the 
higher  prices  demanded  for  the  home  product  because  they 
believed  that  ultimately  the  enlargement  of  the  sphere  of 
operations  and  other"  causes  would  make  the  cost  of  produc- 
tion as  low  in  this  as  in  other  countries.  A  people  with 
enough  foresight  to  anticipate  such  an  outcome  can  be  de- 
pended upon  to  discover  a  way  out  of  the  difficulties  raised 
by  the  combination  of  capital: 

That  a  remedy  against  the  encroachment  of  trusts  can 
only  be  worked  out  within  the  lines  of  the  protective  sys- 
tem seems  plain  to  all  those  ready  to  concede  that  there  is  a 
foundation  for  Rogers'  assumption  that  unrestricted  com- 
petition may  degenerate  into  combination  which  will  ulti- 
mately stifle  true  competition.  If  there  is  an  increase  of  the 
tendency  of  capital  to  seek  investment  where  it  can  most 
profitably  be  employed,  which  has  exhibited  itself  so  signifi- 
cantly in  England,  western  nations  will  be  compelled  to  raise 
the  barriers  of  protection  to  save  themselves  from  the  dis- 
asters which  must  follow. 


5o8        PROTECTION  AND  PROGRESS 

Instances  of  the  transfer  of  British  industries  to  con- 
tinental countries  where  labor  can  be  more  cheaply  obtained 
are  numerous.  The  successful  results  of  such  operations 
have  not  passed  unnoted  by  the  eager  promoter,  who  sees  in 
the  Orient  a  still  better  field  for  the  employment  of  surplus 
capital.  A  few  years  ago  an  American  Minister  to  Japan, 
in  a  widely  published  interview,  the  purpose  of  which  seemed 
to  be  the  setting  at  rest  of  American  fears  of  Oriental  com- 
petition, pointed  out  that  the  cheap  labor  of  Japan  offered  a 
field  for  the  employment  of  the  surplus  capital  of  the  United 
States,  and  he  semi-officially  suggested  the  advisability  of 
looking  over  the  ground  to  see  whether  manufactories  might 
not  be  profitably  established  in  the  island  empire  which 
would  eventually  furnish  cheaper  manufactured  articles 
than  could  be  supplied  by  the  more  expensively  conducted 
establishments  of  this  country.* 

It  hardly  needed  such  a  suggestion,  for  capital  is  alert 
to  take  advantage  of  opportunities  as  rapidly  as  they  present 
themselves.  It  scarcely  requires  an  assurance  of  success ; 
a  promise  often  serves  equally  well,  as  the  experience  of 
England  in  dealing  with  Argentina  and  other  countries  am- 
ply demonstrates.  The  formation  of  joint  stock  companies 
is  so  easy  a  matter  in  modern  times  it  would  be  phenomenal 
if  promoters  did  not  take  advantage  of  the  circumstance  to 
float  concerns  to  exploit  the  cheap  labor  of  the  Orient. 
Imagine  the  glittering  prospectuses  the  ingenious  promoter 
may  put  before  people  disposed  to  invest  in  what  are  known 
as  "industrials"  by  drawing  on  the  official  reports  of  direc- 
tors of  cotton  spinning  and  weaving  factories  in  Japan 
which  show  that  dividends  as  high  as  twenty-eight  per  cent, 
and  none  lower  than  eight  per  cent,  are  declared  by  Japan- 
ese joint  stock  companies.f 

Evidence  that  a  crusade  of  this  kind  has  already  begun 


♦Dun,   appointed  by   Grover  Cleveland. 

fBritish  Consular  Report  on  Trade  at  Hiogo,  1896. 


I 


EQUALIZATION  509 

is  multiplying.  Intimations  of  the  intentions  of  the  shrev.-. 
Japanese  to  enter  the  foreign  loan  markets  are  frequent. 
The  Yokohama  Yorosu,  in  August,  1898,  stated  that  "two 
schemes  for  the  introduction  of  foreign  capital  were  about 
to  be  inaugurated.  One  involving  an  amount  of  10,000,000 
yen  to  be  borrowed  by  the  Nippon  Yusen  Kaisha ;  the  other 
aims  at  securing  10,000,000  yen  in  Germany  with  the  idea 
of  distributing  it  to  various  railway  and  commercial  and 
industrial  companies.  *  *  *  The  Japanese  Government 
is  said  to  be  behind  both  schemes."* 

There  is  no  doubt  these  appeals  will  meet  with  success, 
nor  that  they  will  be  supplemented  by  projects  looking  to 
the  creation  of  rhanufacturing  and  other  industries  in  China, 
where,  in  the  near  future,  the  opportunities  for  the  estab- 
lishment of  such  enterprises  will  be  much  more  numerous 
and  promise  greater  profits.  That  manufacturing  indus- 
tries of  all  kinds  can  be  successfully  carried  on  in  China  as 
in  Japan  every  one  familiar  with  the  subject  testifies.  The 
Chinese  are  apt,  industrious  and  work  for  fabulously  low 
wages.  If  skilfully  managed,  it  is  believed  by  English, 
American,  German,  and  other  consular  agents  who  have 
carefully  studied  the  situation  that  Chinese  textile  factories 
can  be  operated  at  a  cost  which  will  make  competition  with 
their  products  absolutely  impossible.! 

That  the  successful  prosecution  of  the  manufacture  un- 
der modern  conditions  of  textile  fabrics  and  other  articles 
by  Oriental  workers  will  force  the  wages  of  the  western 
operative  to  the  Chinese  level  in  all  countries  where  no 
restraint  is  placed  on  importations  is  believed  by  all  compe- 
tent observers.  It  is  sometimes  urged  that  the  contingency 
is  too  remote  to  be  contemplated,  because  of  the  assumed 
necessity  of  meeting  the  Oriental   home    demand,   which 

^Vancouver,  B.  C,  dispatch  to  American  Press,  August  31,  1898. 
f  See  evidence  grouped  in  U.  S.  Senate  docket,  No.  31,  Fifty-fourth 
Congress,  First  Session. 


510        PROTECTION  AND  PROGRESS 

would  be  enormous  if  the  per  capita  consumption  of  manu- 
factured articles  were  on  the  same  scale  as  in  Western 
countries.  But  this  method  of  reasoning  is  fallacious,  as 
it  ignores  the  possibility  of  an  industry  being  carried  on 
solely  or  largely  for  export  purposes.  It  is  a  well-known 
fact  that  wheat  is  grown  in  many  parts  of  Russia  where  the 
producers  live  wholly  on  black  bread ;  in  Germany  and  other 
continental  countries  the  production  of  beet  sugar  has  been 
carried  on  chiefly  for  export  purposes,  the  domestic  con- 
sumption being  comparatively  small  and  not  increasing  in 
proportion  to  the  output ;  even  England  furnishes  abundant 
instances  of  the  tendency  to  manufacture  to  meet  the  wants 
of  other  peoples  in  entire  disregard  of  the  domestic  demand, 
or  rather  the  lack  of  it. 

Under  the  circumstances,  it  is  carrying  optimism  to 
excess  to  assume  that  the  danger  is  remote  and  that  we  need 
not  fear  evil  results  from  Oriental  competition  until  the 
400,000,000  Chinese  and  the  other  millions  in  Asia  are  able 
to  manufacture  on  a  sufficiently  large  scale  to  supply  their 
own  wants.  Long  before  that  time,  unless  steps  are  taken 
to  prevent  such  a  calamity,  the  surplus  capital  of  Europe  and 
the  United  States  will  be  exploiting  these  fields  of  cheap 
labor  and  forcing  their  products  on  those  nations  which 
have  not  the  sagacity  to  defend  their  own  people  from  a 
competition  which  must  inevitably,  if  persevered  in,  reduce 
all  those  who  take  part  in  it  to  a  common  level. 

The  tariff  on  competitive  articles  would  require  no  other 
justification  for  its  permanent  continuance  than  the  neces- 
sity of  warding  of?  this  contingency,  but  additional  and 
stronger  reasons  may  be  cited  for  its  retention.  The  chief 
of  these  is  that  the  phenomenal  development  of  manufactur- 
ing throughout  the  world,  and  the  extraordinary  efi^orts 
made  by  different  nations  to  increase  production  and  extend 
their  trade,  has  made  a  system  designed  to  remove  inequal- 
ities imperatively  necessary.  The  Cobdenites  vainly  com- 
plain of  the  effects  of  the  undue  stimulus  given  to  pro- 


EQUALIZATION  511 

duction  by  bounties  and  objects  to  the  methods  adopted  by 
rival  countries  to  create  transportation  facihties,  but  the 
nations  resorting  to  such  devices  are  not  Hkely  to  be  swerved 
from  their  course  by  a  consideration  of  elaborate  theories 
which  cannot  be  made  to  harmonize  with  the  results  of 
every  day  practice,  or  by  the  pleading  of  Governments  who 
see  their  dependencies  suffering  from  the  artificially  pro- 
moted competition,  but  are  unwilling  to  make  a  change  in 
their  own  polity  to  cure  the  evil. 

It  is  in  the  highest  degree  improbable  that  the  Germans 
will  ever  be  induced  by  English  representations  or  entreat- 
ies to  remove  the  export  bounty  on  sugar.  So  long  as  its 
effect  is  to  stimulate  German  production  that  country  will 
pay  no  attention  to  outside  sentiment.  "When  the  last  at- 
tempt was  made  to  get  rid  of  foreign  sugar  bounties  nearly 
every  trades  union  in  Great  Britain  petitioned  in  favor  of 
the  bill  for  ratifying  the  convention."*  Emperor  William 
and  his  advisers  were  doubtless  much  affected  by  this  dis- 
play of  unselfishness  by  men  whose  shibboleth  for  years  has 
been  "cheapness"  objecting  to  cheap  sugar,  but  they  would 
hardly  on  that  account  abandon  a  system  that  has  the  effect 
of  increasing  production  and  consumption  and  which  inci- 
dentally permits  the  owners  of  agricultural  land  in  Germany 
to  diversify  their  occupation,  and,  above  all  things,  enlarges 
the  opportunities  of  the  German  worker  to  obtain  profitable 
employment. 

It  is  possible  that  Germany  may  some  day  remove  the 
export  bounty  from  sugar,  but  she  will  never  do  so  be- 
cause the  system  has  proved  injurious.  The  evidence  all 
points  to  a  contrary  effect.  According  to  Mulhall  "the 
average  consumption  of  sugar  in  Germany  in  1888-90  was 
eighteen  pounds  yearly  per  inhabitant,  and  is  at  present 
(1898)  thirty  pounds,  which  is  evidence  that  the  people  are 
better  fed  than  they  were  seven  years  ago.     At  the  same 

♦Williams,   "My   Critics,"    New   Review,   November,    1896. 


512       PROTECTION  AND  PROGRESS 

time,"  he  adds,  "the  industry  is  so  thriving-  that  the  bounty 
on  exportation  has  been  reduced  from  $45  to  $5  per  ton. 
Germany  now  produces  forty  per  cent  of  the  beet  sugar 
made  in  Europe,  as  compared  with  thirty  per  cent  in  1876."* 

Surely  there  is  nothing  in  this  testimony  to  suggest  that 
the  bounty  system  operates  injuriously  in  the  country  in 
which  it  is  practiced.  Other  countries  that  have  resorted  to 
the  system  have  met  with  an  experience  similar  to  Germany. 
We  are  informed  that  "Sweden  in  a  few  years  has  almost 
ceased  to  import  sugar,  raw  or  refined,  although  five  years 
ago  her  population  depended  upon  foreign  supplies.  By 
imposing  a  high  customs  duty  on  foreign  sugars  a  domestic 
beet  sugar  industry  has  been  built  up  sufficient  to  supply 
the  home  market,  and  it  is  believed  will  soon  be  sufficient 
for  export."-|- 

Whatever  may  be  the  result  to  the  rest  of  the  world  it 
cannot  be  said  that  Sweden  will  suffer  from  her  efforts  to 
add  to  the  productiveness  of  her  territory  by  promoting  the 
culture  of  beet  sugar.  It  is  sometimes  rashly  assumed  that 
the  countries  resorting  to  bounties  would  profit  more  by  ab- 
stention from  such  efforts,  the  theory  being  that  capital  and 
energy  are  diverted  from  more  profitable  pursuits.  But  this 
has  been  shown  to  be  an  entirely  baseless  assumption  grow- 
ing out  of  the  fundamental  error  of  economists  who  have 
taught  that  the  supply  of  capital  available  for  the  develop- 
ment of  resources  is  so  limited  that  the  devotion  of  a  portion 
of  it  to  the  artificial  promotion  of  an  industry  necessarily 
means  the  diversion  from  natural  pursuits  of  a  proportionate 
amount  and  a  consequent  injury.  But  it  can  hardly  be  said 
that  the  capital  required  to  expand  the  German  beet  sugar 
industry  from  a  production  of  360,000  tons  in  1876  to  1,620,- 
000  tons  in  1896  was  at  the  expense  of  the  pursuits  which 
might  have  proved  more  profitable,  for  there  is  no  fact  better 

♦Mulhall,  Industrial  Advances  in  Germany,  North  American  Re- 
view, January,  1898. 

tFord,  Commercial  Superiority  of  the  United  States,  North  Ameri- 
can  Review,  January,    1898. 


EQUALIZA.TION  '  513 

established  than  that  during  the  entire  period  of  this  phe- 
nomenal expansion  of  the  beet  sugar  industry  in  Germany 
there  was  a  plethora  of  German  capital  which  offered  itself 
to  any  industry  that  promised  a  profit. 

It  is  not  astonishing  that  these  modern  experiments  in  the 
direction  of  promoting  productivity  should  have  been 
inaugurated,  for  Great  Britain  set  the  example  which  other 
nations  are  now  imitating  with  profit.  Singularly  enough, 
while  free  traders  attempt  to  create  the  impression  that  boun- 
ties and  subventions  are  pernicious,  the  father  of  political 
economy  eulogizes  the  sagacity  of  his  countrymen  in  resort- 
ing to  a  policy  which  resulted  in  making  England  mistress  of 
the  seas.  Adam  Smith  says :  "It  is  not  impossible  that  some 
of  the  regulations  of  this  famous  (Navigation)  Act  may 
have  proceeded  from  national  animosity.  They  are  as  wise, 
however,  as  if  they  had  all  been  detected  by  the  most  delib- 
erate wisdom."*  It  has  been  attempted  to  minimize  the  force 
of  this  declaration  by  pointing  out  that  Smith  had  the  na- 
tional defense  in  mind.  His  assertion  that  "the  defense  of 
Great  Britain  depends  very  much  upon  the  number  of  its 
sailors  and  shipping.  The  act  of  navigation,  therefore,  very 
properly,  endeavors  to  give  the  sailors  and  shipping  of  Great 
Britain  a  monopoly  of  the  trade  of  their  own  country,  in 
some  cases  of  absolute  prohibitions,  and  in  others  by  heavy 
burdens  upon  the  shipping  of  foreign  countries,"!  is  quoted 
to  support  this  view,  and  an  additional  saying,  "as  defense  is 
of  more  importance  than  opulence  the  act  of  navigation  is, 
perhaps,  the  wisest  of  all  commercial  regulations  of  Eng- 
land," is  relied  upon  to  clinch  it.  But  there  are  too  many 
other  admissions  in  the  pages  of  "The  Wealth  of  Nations"  to 
admit  of  a  doubt  that  Adam  Smith  did  not  regard  a  bounty 
as  objectionable  if  its  result  was  to  stimulate  production  and 
thus  lower  prices. 


*Smith,  Wealth  of  Nations,  Book  IV,  Chap.  I. 
tlbid.33 


514        PROTECTION   AND   PROGRESS 

That  any  expressions  of  opposition  to  the  payment  of 
bounties  which  may  be  found  in  Smith's  writings  are  due  to 
a  beHef  that  a  resort  to  the  system  would  result  in  dearness 
rather  than  cheapness  is  shown  in  many  passages.  In  one 
place  he  tells  us  that  "in  many  parts  of  Scotland,  during  cer- 
tain seasons  of  the  year,  herrings  make  no  inconsiderable 
part  of  the  food  of  the  common  people.  A  bounty  which 
tended  to  lower  their  price  in  the  home  market  might  con- 
tribute a  good  deal  to  the  relief  of  a  great  number  of  our  fel- 
low subjects  whose  circumstances  are  by  no  means  af- 
fluent."* In  the  same  connection  he  says:  ''If  any  partic- 
ular manufacture  was  necessary  for  the  defense  of  the  so- 
ciety it  might  not  always  be  prudent  to  depend  upon  our 
neighbors  for  the  supply ;  and  if  such  manufacture  could  not 
otherwise  be  supported  at  home  it  might  not  be  unreasonable 
that  all  other  branches  of  industry  should  be  taxed  in  order 
to  support  it."t 

From  expressions  such  as  these  we  may  readily  infer  that 
Smith  did  not  regard  bounties  with  the  horror  which  his  fol- 
lowers aflFect.  And  when  we  find  him  saying  "the  plentiful 
supply  of  the  home  market  was  not  the  direct  object  of 
these  statutes  (bounty)  ;  but  under  the  pretense  of  encour- 
aging agriculture,  to  raise  the  money  price  of  corn  as  high  as 
possible,  and  thereby  to  occasion,  as  much  as  possible,  a 
constant  dearth  in  the  home  market,"  we  have  a  right  to 
assume  that  if  he  had  been  able  to  foresee  the  tremendous  in- 
crease of  production  which  has  followed  the  artificial  stim- 
ulus of  industry  by  bounties  and  other  forms  of  protection 
he  would  have  indorsed  them  without  hesitation.  Had  he 
dreamed  of  the  possibility  of  a  beet  sugar  industry  being 
called  into  existence  by  artificial  means  which  would  make 
sugar  so  plentiful  that  its  cheapness  would  promote  a  con- 

*Smith,  Wealth  of  Nations,  Chap.  V,  Book  IV. 

flbid. 

tibid. 


EQUALIZATION  515 

sumption  rivaling  that  of  the  cereals  he  would  have  extolled 
the  wisdom  of  the  framers  of  bounty  laws  as  unequivocally 
as  he  did  that  of  the  authors  of  the  English  Navigation  Act. 
But  he  could  not  anticipate  the  development  of  an  industry  he 
had  never  heard  of,  nor  could  he  suppose  that  in  a  little  more 
than  a  century  the  thirteen  colonies  of  England  on  the  Atlan- 
tic seaboard  of  America  would  grow  into  a  nation  able  to 
consume  2,012,729  tons  of  sugar  in  a  single  year  (1894), 
chiefly  because,  through  the  stimulus  given  by  the  bounty 
system,  prices  of  the  commodity  fell  so  low  that  it  is  now 
regarded  as  a  necessary  by  all  classes  and  is  used  as  ex- 
tensively in  the  homes  of  the  working  classes  as  in  the  houses 
of  the  rich. 

But  while  there  can  be  no  question  regarding  the  bene- 
fits to  mankind  from  the  practice  of  artificially  stimulating 
industry,  the  system  has  raised  new  problems,  most  of  them 
the  direct  result  of  a  condition  which  the  free  trader  cannot 
consistently  deprecate,  as  they  are  conducive  to  cheapness. 
There  is  no  doubt  that  appreciation  of  the  fact  and  the  dis- 
position to  act  upon  the  discovery  that  the  ability  to  produce 
is  not  confined  to  a  single  country  are  responsible  in  part  for 
the  aggravation  of  the  phenomenon  of  overproduction  wit- 
nessed in  modern  times.  It  would  have  been  extraordinary 
if,  without  a  change  in  methods  of  distribution,  an  evil  which 
England  complained  of  when  she  enjoyed  a  practical  mo- 
nopoly of  manufacturing  industry,  with  the  whole  world  for 
her  market,  was  not  intensified  by  the  entrance  into  the  in- 
dustrial field  of  rivals  who  now  dispute  with  her  for  suprem- 
acy. If  in  1820,  when  the  production  of  coal  was  only 
17,200,000  tons,  its  energy  when  devoted  to  manufacturing 
sufficed  to  clog  markets,  why  should  we  be  surprised  that  a 
production  of  531,000,000  tons  in  1894  should  produce  a 
similar  result?  In  1840  the  world's  production  of  iron  ore 
was  only  6,400,000  tons,  yet  England,  the  principal  producer 
in  that  year,  was  filled  with  complaints  because  the  world 
would  not  absorb  the  products  of  her  mines  and  factories.    Is 


5i6        PROTECTION  AND  PROGRESS 

it  at  all  strange  then  that  the  situation  should  have  pre- 
sented some  difficulties  in  1894,  when  the  quantity  of  iron 
stone  mined  was  53,000,000  tons?* 

These  questions  almost  answer  themselves.  Any  occa- 
sion there  may  be  for  complaint  must  be  due  to  faulty  dis- 
tribution, and  not  to  the  tendency,  alleged  by  the  free  trader, 
of  protection  to  repress  production.  Instead,  therefore,  of 
studying  methods  of  repressing  universal  production  it  should 
be  the  aim  of  economists  to  reconcile  the  obvious  disposition 
of  the  people  of  all  progressive  nations  to  share  in  the  profits 
of  the  higher  branches  of  industry.  It  ought  to  be  clearly 
apparent  by  this  time  that  the  keynote  of  political  economy 
must  be  the  preservation  of  the  national  existence.  To  recur 
to  a  phrase  of  Adam  Smith's,  it  should  be  recognized  that 
"the  defense  of  the  society"  ought  to  be  the  first  considera- 
tion, because  in  the  modern  struggle  for  existence  it  is  not 
"prudent  to  depend  upon  our  neighbors  for  the  supply"  of 
any  manufactured  article  or  product  which  we  can  produce 
for  ourselves.  Our  experience  as  purchasers  of  iron  while 
dependent  upon  Great  Britain,  cited  elsewhere,  conclusively 
demonstrates  the  correctness  of  the  doctor's  deduction,  and 
an  examination  of  the  results  of  our  dependence  in  other 
directions  will  disclose  similar  results.  It  is  only  by  stead- 
fastly adhering  to  the  determination  of  being  as  self  sufficing 
as  possible  that  a  nation  can  work  out  a  glorious  destiny  for 
itself. 

It  is  often  urged  by  free  traders,  in  moments  when  they 
forget  their  assertions  that  "protection  cannot  protect,"  that 
the  Americans  having  built  up  a  great  manufacturing  indus- 
try, the  necessity  for  a  protective  tariff  no  longer  exists  in 
the  United  States.  But  the  fallacy  of  such  an  assumption 
may  be  easily  exposed.  No  matter  what  the  primary  opinion 
of  the  protectionist  may  have  been  or  how  strenuously  he 
may  have  insisted  on  the  propriety  of  extending  aid  to  infant 


*Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


EQUALIZATION  517 

industries,  it  is  now  seen  that  protection  has  a  still  more  im- 
portant function  to  perform — that  of  equalizing  international 
conditions.  Without  its  aid  countries  would  be  reduced  to 
the  state  of  impotency  which  now  exists  in  England,  where 
the  rulers  are  confronted  with  trade  problems  which  they 
dare  not  handle  as  wisdom  dictates  for  fear  of  violating  an 
"ism."  That  country  is  now  assailed  by  a  proposition  from 
its  West  Indian  dependencies  to  either  provide  a  remedy 
against  the  disastrous  effects  of  the  competition  of  bounty 
promoted  sugar  or  to  permit  the  distressed  people  to  seek 
annexation  with  the  United  States.  What  step  will  finally  be 
taken  remains  to  be  seen;  at  present  a  resort  is  had  to  a 
species  of  aid  which  smacks  very  much  of  the  English  sys- 
tem of  outdoor  relief  and  which  must  make  its  recipients  feel 
like  paupers. 

Perhaps  the  evils  of  unrestricted  competition  are  seen  in 
a  more  exaggerated  form  in  the  British  West  Indies  than 
elsewhere,  but  the  effects  are  more  or  less  the  same  in  every 
country.  In  the  United  States,  notwithstanding  its  immense 
resources  and  measurably  well  diversified  industries,  the  evil 
results  of  attempting  to  dispense  with  a  protective  tariff  were 
witnessed  when  the  authors  of  the  Wilson-Gorman  bill  re- 
duced duties  and  in  many  cases  struck  down  protection  en- 
tirely. The  country  was  at  once  flooded  with  foreign  goods 
and  large  numbers  of  people  were  driven  out  of  employment. 
That  no  benefits  followed  this  enforced  cheapness  is  clearly 
proved  by  the  fact  that  the  consumption  of  many  of  the  great 
staples  diminished  during  the  period  while  the  low  tariff  pre- 
vailed, notably  iron,  the  production  of  which  fell  off  nearly 
thirty-three  per  cent.  Some  persons  in  this  country  were 
led  astray  by  the  sudden  expansion  of  exports  of  manufac- 
tured articles  during  this  period  and  drew  the  inference  that 
circumstances  were  changing  for  the  better  through  the  re- 
duction of  duties,  but  investigation  disclosed  that  our  in- 
creased shipments  of  many  articles  were  due  to  the  sudden 
diminution  of  the  consumptive  ability  of  American  virorking- 


5i8        PROTECTION  AND  PROGRESS 

men.  Foreign  critics  were  not  deceived  and  consoled  them- 
selves with  the  reflection  that  a  recrudescence  of  prosperity 
by  raising  prices  would  remove  the  incentive  to  find  a  market 
abroad,  which  is  only  another  way  of  saying  that  Americans 
are  better  off  when  their  home  markets  absorb  all  that  the 
manufacturers  of  the  United  States  can  produce,  even  though 
the  cost  to  the  consumer  is  increased  during  the  time  of  ex- 
panding consumption. 

There  are  so  many  different  conditions  that  must  be 
equalized  before  there  can  be  anything  like  a  fair  competi- 
tion between  nations  it  would  be  impossible  to  enumerate 
them  all  here.  Some  of  the  more  important  have  already 
been  alluded  to.  The  undesirability  of  attempting  to  compete 
with  races  in  whom  the  habit  of  thrift  has  become  so  in- 
grained by  centuries  of  necessity  that  it  resembles  parsimony 
has  been  dwelt  upon.  Reference  has  also  been  made  to  the 
varying  ideas  of  peoples  respecting  the  value  of  education, 
and  it  is  suggested  that  the  statesmen  of  a  nation  which  pro- 
vides schools  for  all  classes  and  proceeds  on  the  theory  that 
it  is  the  duty  of  the  state  to  give  every  citizen  an  opportunity 
to  fit  himself  for  the  obligations  of  citizenship  cannot  afford 
to  neglect  the  adoption  of  means  to  prevent  other  countries 
from  profiting  by  their  failure  to  similarly  equip  their  own 
working  people.  We  have  seen  also  that  the  English  work- 
ingman,  despite  the  fact  that  he  rejected  the  advice  of  Bright 
and  Cobden  to  submit  to  the  evils  of  unrestrained  competi- 
tion, is,  nevertheless,  vainly  struggling  with  the  aid  of  his 
unions,  to  avert  the  consequences  of  the  law  which  Smith 
has  demonstrated  is  ceaselessly  at  work  pressing  the  toiler 
to  the  limit  of  subsistence.  All  the  solidarity  of  the  English 
trades  unions  is  rendered  ineffective  through  the  failure  of 
the  workingmen  of  Germany,  Belgium  and  other  workers  on 
the  continent  to  accommodate  themselves  to  the  British 
standard  of  work  and  living.  Obviously,  some  form  of  pro- 
tection must  be  found  to  resist  the  encroachments  spoken  of 
or  the  British   workingman    must    succumb.    His    trades 


EQUALIZATION  519 

unions  will  be  powerless  to  benefit  him  when  the  struggle 
between  the  manufacturing  nations  becomes  more  intense,  as 
it  must  when  skill  is  more  generally  diffused  and  overpro- 
duction stimulates  the  tendency  to  dump  surplus  products  on 
foreign  markets. 

There  is  still  another  cause  than  those  enumerated  which 
must  be  considered  when  the  question  of  equalizing  the  con- 
ditions of  nations  receives  the  attention  of  statesmen.  The 
effects  of  a  bounty  designed  to  stimulate  production  and  ex- 
port are  clearly  seen  and  have  been  dwelt  upon  in  this  chap- 
ter, but  there  is  an  indirect  method  of  accomplishing  the  de- 
sired result  which  does  not  attract  much  attention,  but  which 
may  be  made  to  operate  as  effectively  as  a  direct  subvention. 
If  a  particular  industry  is  excused  from  the  burden  of  taxa- 
tion to  all  intents  and  purposes  it  is  aided  as  effectually  as 
though  a  direct  gift  of  money  were  bestowed.  The  results  of 
such  a  course  may  be  seen  in  our  own  country,  where  the 
minor  political  subdivisions  occasionally  resort  to  the  device 
of  exempting  manufacturing  plants  from  taxation  for  the 
purpose  of  attracting  investors  and  often  with  the  object  of 
drawing  industries  from  places  where  they  had  long  been 
established,  but  in  which  they  were  subjected  to  the  same 
rule  of  taxation  as  that  to  which  all  property  owners  of  the 
locality  are  obliged  to  conform.  It  is  no  answer  to  this 
statement  to  say  that  it  is  the  part  of  wisdom  for  all  com- 
munities to  avoid  taxing  productive  industry  and  thus  escape 
being  discriminated  against,  because  in  practice  it  is  found 
impossible  to  excuse  the  property  of  one  class  of  producers 
while  taxing  that  of  another.  The  experiments  of  England 
in  this  direction  have  proved  ruinous  to  agriculture,  which 
has  been  made  to  bear  so  great  a  part  of  the  national  burden 
that  land,  in  spite  of  the  increasing  population  of  the  United 
Kingdom,  is  becoming  less  valuable  year  by  year. 

Somewhat  similar  in  its  operation  to  the  exemption  of 
manufacturing  plants  from  taxation  is  the  promotion  of 
aritficial  facilities  for  the  carrying  on  of  an  industry  in  places 


520         PROTECTION  AND  PROGRESS 

like  Manchester,  England.  That  industrial  center  has  re- 
cently expended  a  large  sum  of  money  in  order  to  create  a 
port  which  will  enable  the  cotton  manufacturers  of  the  dis- 
trict to  bring  the  raw  product  to  their  doors  more  cheaply 
than  under  natural  conditions.  The  obvious  purpose  of  the 
construction  of  the  Manchester  Ship  Canal  is  to  neutralize 
the  advantage  enjoyed  by  Americans  through  their  proxim- 
ity to  the  cotton  fields  which  produce  the  major  part  of  the 
raw  materials  worked  up  in  the  Lancashire  district.  To 
assume  that  the  nation  possessing  supplies  of  raw  materials 
should  refrain  from  taking  measures  to  counteract  the  effects 
of  such  attempts  to  prevent  the  development  of  a  cotton  man- 
ufacturing industry  near  the  source  of  supply  would  be  pre- 
posterous, and  as  there  is  no  possible  mode  by  which  the 
owners  of  spare  capital  can  be  prevented  from  spending  it  in 
creating  artificial  advantages  to  offset  natural  ones,  nothing 
is  left  to  the  statesmen  of  the  country  possessing  the  raw  ma- 
terial but  to  withstand  the  encroachment  by  the  imposition  of 
an  equalizing  duty. 

The  author  of  "Made  in  Germany"  and  other  writers  have 
recently  been  emphasizing  the  evils  resulting  from  the  ten- 
dency of  transportation  corporations  to  carry  goods  brought 
from  a  long  distance  for  a  lesser  rate  than  they  charge  for 
making  short  hauls.  Williams  tells  us  that  "some  British 
steamers  commencing  to  load  for  South  America  at  Bremen 
and  finishing  at  Liverpool  charge  8s  per  ton  at  Bremen,  but 
when  they  come  to  Liverpool  I2s  6d  and  ten  per  cent,  with 
five  per  cent  returnable,  being  Ss  i^d  in  favor  of  the  for- 
eigner. *  *  *  This  prejudicing  of  trade  has  been  ac- 
counted for  by  the  existence  of  a  shipping  ring,  but  (as  Mr. 
Jeremiah  Head  has  pointed  out)  the  better  explanation  lies 
in  the  competition  from  the  continent  of  the  subsidized  lines. 
These  lines  have  a  minimum  rate  of  interest  guaranteed  by 
the  state,  and,  whether  empty  or  laden,  their  steamers  are 
bound  to  run."* 

♦Williams,  Trade  in  Germany,  p.   148. 


EQUALIZATION  521 

The  same  writer  also  calls  attention  to  the  lowness  of 
German  railway  charges,  which  have  their  origin  in  state 
aid.  The  results  of  this  artificial  promotion  of  trade  is  to 
cause  products  to  be  hauled  great  distances  from  the  interior 
of  Germany  to  points  in  England  for  a  less  charge  than  the 
English  producer  has  imposed  upon  him  by  the  British  rail- 
roads. In  the  same  way  the  eagerness  of  the  American  rail- 
ways co-operating  with  the  Atlantic  liners  to  force  traffic  re- 
sults in  products  from  the  United  States  being  landed-  in  the 
cities  of  Great  Britain  more  cheaply  than  they  can  be  hauled 
from  English  farms  to  the  local  markets.  The  tremendous 
waste  involved  by  pursuing  such  methods  has  been  dwelt 
upon  in  the  chapter  showing  that  the  tendency  of  free  trade 
is  to  promote  unnecessary  hauling.  The  remedy  for  the 
trouble  is  pointed  out  by  the  writer  quoted  above,  who  says : 
"The  German  Government  would  soon  tire  of  letting  Silesian 
coal  owners  send  their  coal  at  ruinously  low  rates  to  Baltic 
ports  for  shipment  to  England  when  it  found  that  England 
calculated  the  amount  it  gave  and  added  an  equal  sum  to  the 
cost  of  the  coal  on  landing  in  England."* 

The  Cobdenite  who  has  these  facts  presented  to  his  con- 
sideration refuses  to  recognize  their  significance  and  persists 
in  believing  that  it  will  be  possible  to  induce  nations  to  act 
dififerently  from  individuals  in  trade  matters.  He  assumes 
that  a  country  may  be  persuaded  to  stop  extending  bounties 
to  beet  sugar  growers,  but  he  would  ridicule  the  suggestion 
that  an  individual  should  refrain  from  resorting  to  the  giving 
of  bonuses  to  workingmen  to  stimulate  them  to  greater  ef- 
fort ;  he  complains  because  Germany  and  other  countries  call 
transportation  lines  into  existence  by  offering  subventions, 
but  he  would  be  amazed  if  he  were  told  that  consistency 
ought  to  make  him  demand  that  merchants  and  others  who 
maintain  porters  and  wagons  for  the  free  delivery  of  the 
wares  sold  by  them  should  be  prevented  from  doing  so;  he 

♦Williams,  Trade  in  Germany,,  p.  i68. 


522         PROTECTION  AND   PROGRESS 

professes  to  regard  as  a  grievous  burden  on  the  consumer 
the  imposition  of  a  tariff  duty  because,  as  he  alleges,  it  is  a 
tax  on  one  industry  at  the  expense  of  other  industries,  yet  he 
deliberately  shuts  his  eyes  to  the  fact  that  the  irrational  ef- 
fort of  Great  Britain  to  maintain  trade  supremacy  is  piling 
up  a  mountain  load  of  taxation  which  will  ultimately  crush 
the  life  out  of  British  industry. 

An  English  writer  has  recently  pointed  out  the  length  to 
which  his  countrymen  seem  disposed  to  go  in  their  attempt 
to  force  external  trade  at  the  expense  of  the  general  tax- 
payer. He  shows  that  the  cost  of  British  armament,  which 
was  £24,065,876  in  1873,  increased  to  £33,265,683  in  1893, 
and  to  £41,238,802  in  1897.  In  the  meantime  the  export 
trade,  to  maintain  which  these  enormous  expenditures  are 
incurred,  only  increased  from  £682,292,127  to  £745,422,363 
in  1897.  "It  is  difficult,"  says  the  writer  who  collates  these 
figures,  "for  a  business  man  to  escape  the  interpretation  they 
suggest,"  and  he  quotes  approvingly  the  comment  of  Mr.  A. 
J.  Wilson,  who  remarks :  "If  the  insurance  premium  on  our 
commerce  abroad  represented  by  the  cost  of  our  navy  has 
risen  100  per  cent  in  twenty-five  years,  while  the  value  of  the 
commerce,  import  and  export  together,  has  not  risen  fifteen 
per  cent,  what  inference  can  be  drawn  except  either  that  the 
outlay  is  a  gross  and  cruel  imposition  upon  the  country  or 
that  our  conduct  toward  foreign  nations  has  become  so  exas- 
perating of  late  years  as  to  have  enormously  increased  the 
risk  of  war  with  powerful  enemies,  either  alone  or  in  com- 
bination against  us  ?"* 

In  another  place  an  attempt  was  made  to  show  that  these 
vast  expenditures  are  the  direct  result  of  the  unnatural  effort 
of  the  British  to  monopolize  the  world's  manufacturing  in- 
dustry ;  here  they  are  merely  referred  to  in  order  to  demon- 
strate that  free  trade  requires  as  much  artificial  bolstering  as 
the  attempt  to  raise  pineapples  under  glass  would  in  a  tem- 

*Hobson,  Free  Trade  and  Foreign  Policy,  Contemporary,  August, 


EQUALIZATION  523 

perate  climate.  There  is  no  one  in  authority  in  free  trade 
England  who  holds  to  the  view  advanced  by  the  writer  just 
quoted  that  these  expenditures  are  unnecessary  and  that 
British  trade  would  flourish  without  them.  On  the  contrary, 
there  is  a  profound  conviction  that  the  increased  armament  is 
absolutely  necessary  and  that  the  taxation  for  its  support,  no 
matter  how  galling,  must  be  endured  if  Great  Britain  is  to  be 
saved  from  sinking  to  the  secondary  position  which  her  area 
and  natural  resources  would  entitle  her  to  hold. 

In  whatever  aspect  the  protective  tariff  is  viewed,  whether 
as  a  promoter  of  industries  or  as  an  equalizer  of  conditions 
existing  in  different  nations,  or  as  a  method  of  taxation  by 
which  the  incidence  is  distributed  so  that  the  luxuries  of  the 
rich  are  made  to  bear  a  larger  proportion  of  the  burden  than 
those  of  the  working  classes,  or  as  a  refuge  from  the  system 
of  taxing  incomes  which  an  eminent  free  trader  has  declared 
is  both  unjust  and  impolitic,  it  commends  itself  to  sensible 
men. 

John  Stuart  Mill  says :  "The  income  tax,  on  whatever 
principles  of  equality  it  may  be  imposed,  is  in  practice  un- 
equal in  one  of  the  worst  ways,  falling  heaviest  on  the  most 
conscientious."  To  this  he  adds :  ''This  would  leave  us  to 
concur  in  the  opinion  which  until  of  late  has  usually  pre- 
vailed— that  direct  taxes  on  income  should  be  reserved  as  an. 
extraordinary  resource  for  great  national  emergencies,  in 
which  the  necessity  of  a  large  additional  revenue  overrules 
all  objections."*  This  is  the  course  adopted  by  protection- 
ists in  the  United  States,  who  have  recognized  the  inequitable 
features  of  a  tax  which,  as  Mill  says,  falls  heaviest  on  the 
conscientious  and  virtually  puts  a  premium  on  dishonesty.  In 
this  and  in  other  directions  the  protectionists  of  America  have 
shown  their  sagacity,  and  the  result  has  been  the  upbuilding 
of  an  enormous  manufacturing  and  agricultural  industry, 
which  has  created  a  greater  amount  of  national  wealth  than 


♦Mill,  Principles  of  Political  Economy,  Vol.  II,  p.  427- 


524        PROTECTION  AND  PROGRESS 

any  country  has  hitherto  boasted,  the  acquisition  of  which 
has  been  attended  with  so  little  hardship  to  the  taxpayer  that 
the  question  whether  the  tariff  is  a  tax  is  still  a  moot  one,  but 
is  answered  by  millions  in  such  a  way  as  to  show  that  they 
believe  that  in  most  instances  it  falls  on  the  foreigner,  a  state 
of  mind  which  makes  the  conclusion  irresistible  that  upon 
whomsoever  it  may  fall  the  tax  is  not  severely  felt  by  the  peo- 
ple of  the  protected  country. 


CHAPTER  XXI. 

COBDENISM  A  FAILURE 

FREE   TRADE   THEORIES    CONFUTED    BY    THE   SUCCESS   OF    PRO- 
TECTION. 

Sir  Robert  Giffen's  claim  that  free  trade  is  increasing — Purpose  of 
protection  is  to  promote  production  within  the  national  boun- 
dary— The  first  American  protective  tariff — Washington's  rec- 
ommendation that  home  industries  should  be  encouraged  by 
protective  duties — His  sentiments  shared  by  the  early  states- 
men of  the  republic — The  object  of  economic  policies  is  to  in- 
crease the  national  wealth — Giffen's  assumption  that  protection 
will  be  abandoned  by  the  United  States — Protection  a  sound 
economic  policy  because  it  reduces  waste  to  a  minimum — Grow- 
ing evidence  of  dissatisfaction  over  the  results  of  the  free  trade 
system — The  cheapening  of  food  products  has  not  given  England 
a  special  advantage — Advances  in  skill  made  by  rivals  of  Great 
Britain — The  intense  competition  created  by  driving  the  Eng- 
lish agricultural  laborer  from  the  soil — Proposals  to  forcibly 
deport  pauper  children — Rapid  growth  of  socialistic  tendencies 
in  England — The  pauper  system  of  England — The  proposal  to 
establish  public  granaries  in  England — Probable  effects  of  the 
exhaustion  of  British  coal  measures — The  maintenance  of  sea 
power  and  the  coal  supply — The  necessity  of  the  United  States 
finding  an  outlet  for  surplus  coal  will  create  a  great  ocean- 
carrying  trade — The  dissipation  of  English  coal  resources  will 
ultimately  prove  destructive  to  British  maritime  power — The 
question  of  subsidizing  ocean-going  ships — Our  cheap  iron  and 
cheap  coal  may  render  such  a  resort  unnecessary. 

Sir  Robert  Giffen,  to  whom  frequent  reference  has  been 
made  in  these  pages,  in  an  address  delivered  by  him  before 
the  North  Staffordshire  Chamber  of  Commerce  on  Decem- 
ber 15,  1897,  gave  expression  to  certain  views  which  seem  to 

525 


526         PROTECTION  AND  PROGRESS 

demonstrate  the  incapacity  of  a  Cobdenite,  no  matter  how 
gifted,  to  perceive  the  drift  of  current  economic  thought  or 
to  reaHze  that  the  principles  of  Cobdenism  have  been  ut- 
terly abandoned  even  in  England.  Instead  of  recognizing 
facts  as  they  exist,  he  asserts  "that  the  substantial  successes 
in  matters  commercial  have  been  for  a  long  time  past  and 
still  are  on  the  side  of  free  trade  and  not  on  the  side  of  pro- 
tection. Not  only,"  he  says,  "is  there  far  more  free  trade  in 
the  world  than  people  sometimes  think,  but  much  of  it  is  of 
very  recent  growth."* 

This  extraordinary  conclusion,  and  also  that  which  im- 
plies that  the  enormous  expansion  of  internal  trade  of  pro- 
tectionist countries  is  a  triumph  for  free  trade,  is  reached  by 
totally  ignoring  the  fact  that  while  protection  is  a  national 
policy  it  never  contemplated,  as  all  Cobdenites  falsely  as- 
sume, the  restriction  of  trade.  Its  purpose  has  always  been 
plainly  stated  by  its  advocates  to  be  the  promotion  of  indus- 
try within  the  national  borders,  and  it  has  for  its  basis  the 
rational  concept  of  Adam  Smith  that  "it  is  of  more  conse- 
quence that  the  capital  of  a  manufacturer  should  reside  within 
the  country,"  as  "it  necessarily  puts  into  motion  a  greater 
quantity  of  productive  labor  and  adds  a  greater  value  to  the 
produce  of  the  land  and  labor  of  the  society/'f  Protection- 
ists endowed  with  reasoning  powers  could  not  help  seeing 
the  force  of  Smith's  observation  that  "the  greater  the  num- 
ber and  revenue  and  inhabitants  of  the  town  the  more  ex- 
tensive is  the  market  which  it  aflfords  to  those  of  the  coun- 
try; and  the  more  extensive  that  market  it  is  always  more 
advantageous  to  a  great  number.  The  corn  which  grows 
within  a  mile  of  the  town  sells  there  for  the  same  price  with 
that  which  comes  from  twenty  miles'  distance."  J  They  also 
recognized  the  homely  truth  in  this  saying:    "A  small  quan- 

♦Giffen,  The  Success  of  Free  Trade,  New  England  Free  Trade 
Bulletin,   No.  2,  of   1898. 

fSmith,  Wealth  of  Nations,  Book  II,  Chap.  V. 
Jlbid,  Book  III,  Chap.  I. 


COBDENISM  A  FAILURE  527 

tity  of  manufactured  produce  purchases  a  great  quantity  of 
rude  produce.  A  trading  and  manufacturing  country,  there- 
fore, naturally  purchases  with  a  small  part  of  its  manufac- 
tured produce  a  great  part  of  the  rude  produce  of  other 
countries  ;  while,  on  the  contrary,  a  country  without  trade  and 
manufactures  is  generally  obliged  to  purchase  at  the  expense 
of  a  great  part  of  its  rude  produce  a  very  small  part  of  the 
manufactured  produce  of  other  countries."* 

These  ideas  were  strongly  impressed  on  the  minds  of  the 
men  who  took  a  leading  part  in  the  formation  of  the  Amer- 
ican Union.  The  First  Congress  of  the  United  States,  in 
the  preamble  to  the  first  revenue  law  adopted,  declared :  "It 
is  necessary  for  the  support  of  the  Government,  the  discharge 
of  the  debts  of  the  United  States  and  the  encouragement  and 
protection  of  manufactures  that  duties  be  laid  on  goods, 
wares  and  merchandise  imported." f  In  Washington's  first 
annual  message  to  Congress  he  said :  "The  advancement  of 
agriculture,  commerce  and  manufactures  by  all  proper  means 
will  not,  I  trust,  need  recommendation ;  but  I  cannot  forbear 
intimating  to  you  the  expediency  of  giving  effectual  encour- 
agement as  well  to  the  introducer  of  new  and  useful  inven- 
tions from  abroad  as  to  exertions  of  skill  in  producing  them 
at  home.'J  Madison  expressed  similar  views,  declaring 
himself  in  favor  of  a  policy  "calculated  to  encourage  the  pro- 
ductions of  our  country  and  protect  our  infant  industries" 
when  presenting  an  amendment  to  the  first  revenue  law,  and 
Hamilton  elaborately  defended  the  protective  policy  thus 
early  inaugurated,  giving  as  a  leading  reason  why  it  should 
be  retained  that  it  would,  by  promoting  manufactures,  create 
"a  new  demand  in  some  instances  and  a  steady  one  in  all 
cases  for  the  products  of  the  soil." 

Washington,  seeing  with  a  prescient  eye  the  dangers  of 


*Smtth,  Wealth  of  Nations,  Book  IV,  Chap.  IX. 
f  Act  approved  July  4,  1789,  by  George  Washington. 
|First  annual  address  of  George  Washington.  January  8,  1790;  Mes- 
sages and  Papers  of  the  Presidents,  Vol.  I,  p.  65. 


528         PROTECTION   AND   PROGRESS 

dependence,  urged  his  countrymen  in  his  Farewell  Address 
to  build  up  home  industries.  "Congress,"  he  said,  "has  re- 
peatedly and  not  without  success  directed  their  attention  to 
the  encouragement  of  manufactures.  The  object  is  of  too 
much  consequence  not  to  insure  a  continuation  of  their  ef- 
forts in  every  way  which  shall  appear  eligible.  *=(=** 
Ought  our  country,"  he  asks,  "to  remain  dependent  on  for- 
eign supply  precarious  because  able  to  be  interrupted?  If 
the  necessary  article  should  in  this  mode  cost  more  in  time 
of  peace  will  not  the  security  and  independence  thence  arising 
form  an  ample  consideration?" 

In  the  face  of  this  testimony,  which  conclusively  proves 
that  the  national  welfare  was  the  paramount  idea  of  the  early 
protectionists  and  all  their  followers,  and  of  the  further  fact 
that  concurrently  with  the  adoption  of  the  system  provisions 
were  inserted  in  the  Constitution  providing  for  absolute 
freedom  of  trade  between  the  people  of  the  different  States 
of  the  Union,*  Mr.  Giffen  seriously  refers  to  this  free  inter- 
course as  though  it  were  a  new  development,  forced  on  the 
nation  by  the  example  of  Cobdenism.  He  says :  "Thus  in 
spite  of  all  that  protectionist  policy  may  do,  even  the  most 
protectionist  country  nozvadays  conducts  the  greater  part  of 
its  business  under  free  trade  conditions,"  and  in  another  pas- 
sage he  asserts :  "Protectionists,  however,  notwithstanding 
all  their  boasting,  have  not  the  courage  of  their  convictions. 
They  will  not  set  up  customs  lines  with  protective  tariffs  in- 
side a  particular  political  area,  however  large,  although  the 
economic  conditions  are  present  which  they  plead  as  excusing 
such  tariffs."! 

Such  a  statement  as  this  can  only  be  characterized  as 
bungling  disingenuousness.  Sir  Robert,  as  a  student  of  eco- 
nomic subjects,  must  know  that  the  protective  policy  is  wholly 
founded  on  considerations  of  national  welfare,  and  that, 

♦Constitution  of  the  United  States,  Article  I,  Sections  8  and  9. 
fGiffen,  The  Success  of  Free  Trade,  New  England  Trade  Bulletin, 
No.  2,  1898. 


COBDENISM  A  FAILURE  529 

therefore,  to  have  attempted  to  set  up  any  other  rule  than 
that  formulated  in  the  Constitution  providing  for  the  freest 
possible  trade  intercourse  between  the  people  of  the  several 
States  would  have  been  inconsistent  and  would  have  violated 
the  conviction  expressed  by  Washington,  and  shared  by  all 
protectionists,  that  in  order  to  guard  against  dependence 
upon  other  nations  it  would  be  wise  for  the  people  of  the 
United  States  to  make  such  sacrifices  as  would  be  necessary 
to  create  and  maintain  a  home  manufacturing  industry. 

Puerile  is  too  feeble  a  term  to  employ  in  characterizing 
comment  of  the  kind  which  thus  ineffectually  seeks  to  dis- 
guise the  real  purposes  of  economic  policies.  Sir  Robert 
Giffen  knows  perfectly  that  the  object  of  protection  in  this 
country  is  the  development  of  the  national  resources  and  that 
the  ultimate  aim  of  those  who  advocate  it  is  to  increase  the 
national  wealth.  This,  too,  we  infer  from  the  statements  and 
admissions  of  followers  of  the  Manchester  school  is  the  object 
of  free  trade,  the  underlying  assumption  being  that  the  crea- 
tion of  wealth  must  result  in  bettering  the  condition  of  the 
people  within  the  borders  of  the  country  in  which  the  wealth 
is  accumulated.  If  this  is  not  the  purpose  of  the  Cobdenites 
Sir  Robert  Giffen  has  wasted  much  time  in  the  preparation 
of  his  voluminous  essays  and  his  statistical  tables  in  which 
he  laboriously  strives  to  show  that  the  English  people  have 
had  their  comforts  increased  during  the  past  half  century  and 
that  the  inequalities  of  condition  are  gradually  being  re- 
moved.* 

It  is  idle,  therefore,  to  undertake  to  show,  as  Sir  Robert 
Giffen  does,  that  because  there  is  transacted  within  the  bor- 
ders of  the  United  States  a  trade  which  rivals  in  volume  the 
combined  external  trades  of  all  the  nations  of  the  world  a 
great  victory  has  been  gained  for  free  trade.  It  is  easy,  how; 
ever,  to  show,  on  the  other  hand,  that  had  protection  been 
neglected  the  development  of  the  national  resources  would 


*Giflfen,  "The  Growth  of  Capital"  and  "Essays  in  Finance." 
34 


530         PROTECTION   AND   PROGRESS 

have  languished  and  that  the  wealth  of  the  United  States 
might  not  have  increased  at  all.  That  appears  to  be  the  fate 
of  all  countries  whose  peoples  have  not  energy  enough  to 
adopt  a  course  designed  to  promote  the  national  welfare,  or 
whose  statesmen  lack  the  wisdom  to  perceive  the  force  of 
Smith's  assertion  that  the  nations  which  confine  themselves 
to  the  ruder  forms  of  production  are  merely  working  for  the 
affgrandizement  of  the  nations  sagacious  enough  to  diversify 
their  industries. 

And  it  may  be  asserted  with  equal  positiveness  that  Sir 
Robert  is  also  at  fault  when  he  declares  that  "the  United 
States,  nolens  volens,  must  very  soon  become  a  country  of 
international  free  trade,"  if  he  means  thereby  that  the  states- 
men of  this  country  will  in  the  future  disregard  the  necessity 
of  adopting  some  method  by  which  international  conditions 
may  be  equalized.  In  venturing  this  assumption  he  has  dis- 
regarded the  tendencies  displayed  in  free  trade  England, 
where  a  Government  has,  under  popular  pressure,  been  com- 
pelled to  resort  to  the  expedient  of  extending  aid  to  the 
planters  of  the  British  West  Indies,  whose  business  has  been 
destroyed  by  the  competition  of  the  beet  sugar  growers,  and 
that  there  is  now  under  British  consideration  a  project  to 
maintain  national  granaries  in  order  to  ward  off  the  danger 
which  the  overpopulation  and  the  unprofitableness  of  agricul- 
ture in  the  British  Isles  has  brought  about.  In  the  face  of 
movements  such  as  these,  and  the  rapidly  growing  sentiment 
that  Great  Britain  is  at  a  commercial  disadvantage  in  dealing 
with  other  nations,  it  is  something  in  the  nature  of  a  diversion 
for  an  advocate  of  free  trade  to  pretend  that  protection  has 
defeated  its  own  objects  and  that  we  will  be  forced  to  throw 
open  our  ports  to  competing  goods  without  exacting  that 
they  shall,  before  being  privileged  to  enter  our  markets,  pay 
a  tax  which  will  equalize  any  differences  in  conditions  that 
may  exist  between  this  country  and  the  country  from  which 
the  imports  come. 

Before  the  abandonment  of  protection  takes  place  it  will 


COBDENISM  A  FAILURE  531 

have  to  be  demonstrated  that  international  competition  under 
existing  conditions  would  not  be  conducive  to  wastefulness, 
and  it  would  have  to  be  made  clear  to  American  statesmen 
that  the  adoption  of  the  Cobden  idea  would  not  result  in  a 
competition  in  which  victory  would  crown  the  efforts  of 
capital  rather  than  deserving  competitors.  That  the  contest 
and  its  result  would  be  of  the  nature  described  may  be  in- 
ferred from  these  remarks  made  by  the  representative  of  the 
Boston  Chamber  of  Commerce  before  the  Quebec  conference 
which  attempted  the  adjustment  of  tariff  and  other  differ- 
ences between  the  United  States  and  Canada.  The  gentle- 
man alluded  to  said:  "What  we  desire  is  a  chance  to  sell 
our  manufactured  goods  in  the  Canadian  markets.  We  be- 
lieve in  asking  this  of  the  Quebec  conference,  we  are  speak- 
ing the  sentiments  of  280,000  workingmen  along  the  Cana- 
dian border  of  the  United  States.  In  Massachusetts  alone  we 
manufacture  $900,000,000  of  goods  each  year,  and  we  want  a 
market  for  these  goods.  We  do  not  fear  competition,  for 
we  have  the  greater  wealth  and  facilities  on  our  side."* 

There  is  no  hint  here  of  the  fact  that  there  is  no  substan- 
tial difference  between  the  natural  conditions  of  Canada  and 
New  England  which  would  make  the  latter  better  fitted  to 
manufacture  than  the  former ;  there  is  simply  a  confident  ex- 
pression of  the  belief  that  the  greater  wealth  and  existing 
facilities  of  the  New  England  States  would,  in  what  is 
euphemistically  termed  a  fair  contest,  enable  the  Americans 
to  beat  the  Canadians  in  their  own  markets.  The  ideas  of  the 
speaker  differ  in  no  essential  particular  from  those  expressed 
by  Englishmen  during  the  period  when  Americans,  under 
the  influence  of  the  slave  oligarchy,  were  wavering  in  their 
devotion  to  protection  and  were  showing  signs  of  disregard- 
ing the  warning  of  Washington  to  avoid  remaining  in  a  state 
of  dependence  upon  foreigners.  Had  the  United  States  been 
misled  by  such  arguments  the  representative  of  the  New 

*Howes,  address  of  to  Quebec  Conference,  August  31,  1898. 


532         PROTECTION  AND   PROGRESS 

England  Chamber  of  Commerce  would  not  have  been  able  to 
make  his  proud  boast,  for  the  manufacturing  industry  of  that 
section  would  have  been  unable  to  withstand  the  assaults  of 
the  English,  and  the  wealth  and  superior  facilities  he  speaks 
of  as  existing  in  Massachusetts  would  not  have  been  called 
into  existence. 

It  is  possible  that  the  Canadians,  disregarding  the  lessons 
of  experience,  may  conclude  that  present  cheapness  and  per- 
petual dependence  are  more  alluring  than  a  temporary  sacri- 
fice and  permanent  prosperity,  but  that  would  offer  no  reason 
why  we  should  incur  the  risks  which  Jeans  and  other  British 
economists  and  the  statistics  of  English  trade  show  that  open 
ports  invite.  Sound  economy  demands  that  the  process  of 
manufacturing  be  carried  on  as  near  as  practicable  to  the 
sources  from  whence  the  supplies  of  raw  material  and  the 
food  to  feed  the  people  who  work  it  up  into  finished  articles 
are  derived.  All  the  sophistries  that  may  be  suggested  by 
the  most  ingenious  dialecticians  cannot  disguise  the  fact  that 
it  is  wasteful  to  haul  raw  material  three  thousand  miles  to 
be  fashioned  into  goods  to  be  returned  to  the  country  in 
which  the  raw  materials  originated ;  nor  can  any  argument 
be  framed  which  will  convince  reasonable  men  that  it  is  wise 
for  a  country  to  deliberately  cheapen  its  peculiar  products  so 
that  other  countries  may  be  enabled  to  compete  on  more 
favorable  terms  in  supplying  those  articles  the  production  of 
which  brings  wealth  and  prosperity  to  the  producers. 

The  most  profitable  policy  for  the  United  States  and  the 
world  at  large  is  that  of  protection.  It  may  prove  injurious 
to  Great  Britain,  but  that  is  because  she  has  attempted  more 
than  her  resources  justify,  but  it  cannot  operate  otherwise 
than  beneficially  in  countries  of  great  resources,  capable  of 
sustaining  immense  populations,  such  as  the  United  States 
and  Russia.  In  the  United  States  the  effect  of  protection 
has  been  to  call  into  existence  a  vast  manufacturing  industry, 
which,  in  turn,  has,  in  the  manner  described  by  Adam 
Smith,  created  a  great  market  for  farm  products  and  per- 


COBDENISM  A  FAILURE  533 

mitted  an  expansion  which  could  never  have  taken  place 
had  the  nation  elected  to  act  as  a  hewer  of  wood  and  drawer 
of  water  for  those  nations  which  had  established  manufac- 
tures long  before  the  United  States  entered  the  industrial 
race.  Now  that  great  manufacturing  industries  have  been 
called  into  existence  it  would  be  criminal  to  imperil  them 
in  a  struggle  the  outcome  of  which  would  depend  almost 
wholly  upon  the  willingness  of  the  owners  of  capital  and 
workers  in  the  old  world  to  regain  by  temporary  sacrifices 
the  advantages  they  have  lost  by  the  people  of  the  United 
States  holding  their  home  markets. 

The  intensity  of  such  a  contest  can  hardly  be  exagger- 
ated. We  have  some  foreshadowings  of  the  probable  con- 
sequences in  the  strikes  of  Great  Britain,  which  frequently 
endure  for  months.  No  reasonable  person  will  assume  that 
these  manifestations  of  the  discontent  of  workingmen  and 
the  tenacious  opposition  to  their  demands  made  by  employ- 
ers are  frivolous.  The  history  of  English  industry  indicates 
that  the  British  employer  is  quick  enough  to  yield  to  the 
demands  of  his  working  people  when  he  thinks  the  state  of 
trade  will  justify  him  in  pursuing  such  a  course ;  we  must 
assume,  therefore,  that  when  he  holds  out  for  months  against 
the  demands  of  the  trades  unions  he  means  what  he  says 
when  he  declares  that  he  is  maintaining  his  position  with 
difficulty  and  that  concessions  would  prove  injurious ;  and, 
on  the  other  hand,  we  may  feel  assured  that  the  worker  who 
pinches  himself  to  the  point  of  starvation  to  win  in  the 
struggle  with  his  employer  is  convinced  that  the  issue  is  to 
him  the  vital  one  of  whether  a  fair  day's  work  is  worth  a 
living  wage. 

These  ever  recurring  strikes  in  free  trade  England  and 
a  hundred  other  circumstances  all  indicate  that  Sir  Robert 
Giflfen  is  in  error  in  assuming  that  Cobdenism  is  destined 
to  prevail  throughout  the  world.  J.  Torold  Rogers  may 
have  been  excusable  for  assuming  as  he  did  a  quarter  of  a 
century  ago  "that  in  England  at  least  the  question  of  pro- 


534         PROTECTION  AND  PROGRESS 

tection  of  manufactures  is  finally  settled,"  but  it  is  hazard- 
ous to  make  such  a  statement  when  a  condition  of  affairs 
exists  such  as  that  described  by  numerous  English  writers, 
all  of  whom  are  entitled  to  as  much  consideration  as  Giffen, 
who,  living  in  the  past,  refuses  to  note  what  is  going  on 
about  him.  When  a  Merchandise  Marks  Act  is  passed,  the 
professed  object  of  which  is  to  induce  Englishmen  to  patron- 
ize home  products  to  the  exclusion  of  those  imported,  the 
existence  of  a  strong  protective  bias  is  indicated.  The  fact 
that  a  book  whose  plainly  declared  purpose  is  to  warn  Brit- 
ons against  the  dangers  of  foreign  competition  can  make  a 
furore  in  England  and  win  applause  from  a  large  section  of 
the  public  shows  that  the  security  which  the  teachings  of 
the  Manchester  school  once  inspired  has  vanished  and  that 
confidence  in  the  future  has  been  displaced  by  dread.  When 
Englishmen  freely  acknowledge  the  accuracy  of  such  state- 
ments as  those  we  find  in  an  economic  monograph  which  has 
had  a  larger  circulation  in  Great  Britain  than  any  other 
publication  of  a  similar  character  in  recent  years,  and  in 
which  the  writer  declares  that  "the  industrial  glory  of  Eng- 
land is  departing  and  England  does  not  know  it,"*  and  who 
assigns  as  a  reason  for  this  decadence  a  lack  of  protection, 
which  places  English  workingmen  at  a  disadvantage  with 
the  poorer  paid  workingmen  of  the  continent,  we  are  com- 
pelled to  distrust  Sir  Robert's  assurances  of  the  triumph 
of  free  trade. 

We  are  assured  by  an  English  writer  that  "if  the  United 
Kingdom  is  to  maintain  even  its  present  level  of  prosperity 
under  the  present  conditions  of  population  and  of  manu- 
facture, it  is  absolutely  necessary  that  its  export  trade  should 
increase  in  value  by  about  £2,600,000  annually."!  The 
indications  are  that  under  the  existing  system  it  will  be 


*  Williams,  Trade  in  Germany,  p.   i. 

f  Kershaw,   The   Future   of   British   Trade,   Fortnightly,   November, 
1897. 


COBDENISM  A  FAILURE  535 

impossible  for  Great  Britain  to  hold  what  trade  she  has. 
Instead  of  increasing  her  exports,  they  are  declining  in  vol- 
ume and  value.*  Therefore,  the  question  arises  whether 
that  country  has  not  more  reason  than  those  which  resort  to 
protection  for  dreading  the  consequences  suggested  by  the 
writer  just  quoted,  who  asserts  that  "the  second  path  of 
industrial  development  is  that  upon  which  we  are  at  present 
traveling.  It  leads,  to  an  international  industrial  warfare 
of  the  most  savage  intensity.  This  warfare,  if  it  be  per- 
mitted to  proceed  to  its  logical  issue,  can  have  but  one  re- 
sult— the  reduction  of  the  standard  of  life  and  comfort  in 
all  countries  to  the  lowest  level  at  which  human  beings  in 
any  part  of  the  world  are  willing  to  exist."t 

As  the  major  part  of  the  world  has  refused  to  accept 
the  theories  of  Cobden  the  application  of  the  above  is  not 
universal.  If  the  United  States  refuses  to  engage  in  a  savage 
contest  of  the  nature  described  it  cannot  be  assumed  that 
her  working  people  will  be  reduced  to  the  common  level  of 
degradation  which  must  be  the  outcome  of  the  attempts  of 
great  masses  of  capital  to  find  employment. |  But  while 
the  United  States  and  other  countries  decline  to  subject 
their  toilers  to  the  risks  which  unrestrained  competition 
involves  they  still  perform  a  part  in  the  international  strug- 
gle, and  one  calculated  to  place  the  unprotected  worker  of 
other  countries  at  a  disadvantage.  Mr.  Jeans  has  shown 
how  protective  nations  may  preserve  their  home  market  by 
dumping  their  surplus  products  upon  those  countries  ready 
to  receive  them.  These  surpluses  are  constantly  growing  in 
volume  and  they  are  seeking  a  market  in  Great  Britain  and 
in  countries  hitherto  dependent  upon  British  manufacturers 

*Warren,  The  United  States  Export  Trade,  Westminster,  January, 
1899. 

j- Kershaw,  The  Future  of  British  Trade,  Fortnightly,  November, 
1897. 

jConart,  The  Economic  Basis  ef  Imperialism,  North  American  Re- 
view,   September,    1898. 


536        PROTECTION  AND   PROGRESS 

for  their  supplies  of  finished  articles.  The  magnitude  of 
this  dumping  movement  is  attested  by  the  swelling  figures 
of  English  imports  and  the  crippling  of  British  industries. 
Its  rapid  growth  is  a  just  cause  for  alarm  and  accounts  for 
the  appearance  of  such  publications  as  "Made  in  Germany" 
and  that  almost  revolutionary  production  of  Robert  Blatch- 
ford,  "Merrie  England,"  which,  in  its  various  forms,  has 
had  a  reputed  circulation  of  millions  of  copies  in  the  United 
Kingdom. 

Sir  Robert  Giflen  would  doubtless  sneer  at  the  sugges- 
tion that  emanations  such  as  these  are  taken  more  account 
oi  in  England  than  his  elaborate  statistics  and  his  far-fetched 
assumption  that  free  trade  is  gaining  ground  throughout 
the  world,  but  the  facts  are  against  him.  It  was  some  time 
in  1894  that  Blatchford  wrote:  "Suppose  we  go  to  war  with 
America!  What  happens?  Do  you  remember  the  cotton 
famine  ?  That  was  bad,  but  a  mere  trifle  to  what  an  Anglo- 
American  war  would  be.  We  should,  in  fact,  be  beaten 
without  firing  a  shot.  America  need  only  close  her  ports 
to  corn  and  cotton  and  we  should  be  starved  into  surrender 
and  acceptance  of  her  terms."*  Since  the  appearance  of 
this  screed  the  papers  and  reviews  of  England  have  been 
filled  with  articles  dwelling  on  the  evils  of  dependence,  and 
the  agitation  will  probably  culminate  in  the  creation  of  na- 
tional granaries,  with  all  the  attendant  dangers  which  such 
a  system  is  calculated  to  bring  in  its  train. 

It  is  doubtful,  however,  whether  such  artificial  devices 
will  relieve  Great  Britain  from  the  consequences  of  her  pol- 
icy of  undue  expansion  in  one  direction.  The  great  wealth 
accumulated  auring  the  period  while  she  was  profiting  at 
the  expense  of  improvident  or  undeveloped  countries  has 
brought  about  a  condition  of  affairs  which  must  impede 
attempts  to  preserve  the  home  market  for  English  workers. 
The  enormous  holdings  of  the  obligations  of  foreigiiers, 

♦Blatchford,  Merry  England,  Chap.  IV. 


COBDENISM  A  FAILURE  537 

which,  while  the  countries  indebted  were  in  a  state  of  de- 
pendence upon  British  manufacturers,  were  a  source  of  tre- 
mendous profit,  are  certain  to  become  a  plague  rather  tlian 
a  blessing  to  the  English  workingman  in  the  near  future, 
for  it  must  be  clear  to  the  dullest  comprehension  that  some 
day  such  countries  as  the  United  States  will  be  better  able 
to  spare  their  surplus  of  manufactured  articles  than  the  food 
stuffs  required  to  maintain  the  people  engaged  in  their  fab- 
rication. 

The  Cobdenite  school  of  economists  made  an  attempt  to 
perpetuate  English  manufacturing  supremacy  by  inculcating 
the  idea  that  nations  with  agricultural  capabilities  would 
find  their  greatest  profit  in  devoting  themselves  to  the  pro- 
duction of  raw  materials  and  food  supplies  and  exchanging 
them  for  British  manufactured  products.  But  the  sophistry 
of  the  argument  was  easily  detected,  and  most  western  peo- 
ples, as  has  elsewhere  been  shown,  elected  to  follow  the 
more  rational  plan  of  concurrently  developing  agriculture 
and  manufactures.  The  United  States  in  particular  refused 
to  commit  the  blunder  of  confining  her  energies  to  the  pro- 
duction of  those  things  which  the  English  asserted  she  was 
best  fitted  to  produce.  A  consequence  of  this  refusal  has 
been  the  development  of  agriculture  on  a  more  stupendous 
scale  than  would  have  been  possible  had  the  farm  and  the 
factory  been  divorced. 

In  the  chapter  devoted  to  showing  the  stimulating  effects 
of  protection  on  the  agricultural  industry  of  this  country 
facts  are  cited  which  force  the  conclusion  that  the  rapid 
opening  of  the  fertile  lands  of  the  United  States  was  wholly 
due  to  the  policy  of  creating  a  domestic  manufacturing  in- 
dustry. In  various  ways  this  policy  operated  to  rapidly 
bring  under  cultivation  tracts  which  would  have  lain  idle 
for  centuries  under  other  conditions.  This  speedy  develop- 
ment largely  contributed  to  the  great  cheapening  of  the 
price  of  bread  stuffs,  which  is  one  of  the  most  striking  feat- 
ures in  modern  economics,  and  it  has  been  more  instru- 


538         PROTECTION  AND  PROGRESS 

mental  than  any  other  cause  in  giving  the  old  world  an 
abundant  supply  of  meat  products  at  prices  which  have  made 
that  class  of  food  less  of  a  luxury  than  at  any  other  time 
since  the  Middle  Ages. 

But  despite  this  remarkable  cheapening  of  products  used 
by  the  toiler  in  maintaining  existence  no  such  result  as  was 
anticipated  by  the  Manchester  school  has  occurred.  The 
English  millhand  can  today  obtain  bread  and  meat  more 
cheaply  than  the  most  sanguine  Cobdenite  ever  dreamed 
he  would,  but  the  English  manufacturer  is  not  able  on  that 
account  to  enlarge  his  export  trade.  So  striking  has  been 
the  refutation  of  this  free  trade  assumption  it  is  forced  on 
the  attention  of  men  who  are  not  directly  concerned  with 
the  discussion  of  economics,  and  who  only  refer  to  the  sub- 
ject because  it  touches  a  matter  in  which  they  have  a  spyecial 
interest. 

Among  writers  of  this  class  is  the  author  of  "The  Iron- 
clad in  Action."  In  a  review  of  the  growth  of  the  world's 
armaments  which  appeared  in  1898  he  presented  several 
diagrams  showing  the  increase  of  national  expenditure  for 
warlike  purposes  and  the  ability  of  the  various  nations  to 
support  armies  and  navies,  which  he  assumed  would  be  best 
indicated  by  the  capacity  to  produce  a  surplus  for  export 
trade.  In  one  of  these  diagrams  the  progress  of  Great 
Britain  and  other  countries  in  external  trade  was  exhibited. 
It  showed  that  Great  Britain  in  the  year  1868  had  "a  special 
export  trade" — the  phrase  as  employed  bv  the  v-iter  mean- 
ing natural  and  manufactured  products  of  the  United  King- 
dom— of  i  1 80,000,00,  which  in  1897  had  only  increased 
to  £230,000,000,  having,  however,  in  the  meantime,  in  1890, 
exceeded  £260,000,000.  The  United  States,  on  the  other 
hand,  with  an  export  trade  of  only  £54,000,000  in  1868,  had 
in  1897  reached  £190,000,000.  In  explanation  the  writer 
remarked :  "Last  in  the  scale  of  general  diagrams  are  the 
special  exports.  It  will  be  noted  that  Germany  is  steadily 
gaining  on  England,  while  the  advance  of  the  United  States 


COBDENISM  A  FAILURE  539 

is  simply  phenomenal.  *  *  *  It  is  difficult,"  he  adds, 
"to  reconcile  this  diagram  with  Cobden's  prophecy.  That 
protectionist  states  are  overhauling  us  fast  can  no  longer  be 
denied,  it  looks  as  though  before  the  end  of  the  present 
century  the  special  exports  of  Germany  and  of  the  United 
States  will  be  greater  than  our  own."* 

The  writer's  conjecture  that  the  exports  of  the  United 
States  would  exceed  those  of  England  before  the  close  of  the 
century  was  fully  justified,  for  the  statistics  of  exports  of 
this  country  for  the  year  1898  show  that  their  value  con- 
siderably exceeded  those  of  Great  Britain  for  the  same 
period,  and  nearly  touched  the  highest  point  reached  by 
the  United  Kingdom  in  1890,  when  the  value  of  the  special 
exports  of  that  country  amounted  to  i26o,ooo,ooo.|  That 
there  should  be  such  an  increase  in  the  external  trade  of  a 
protectionist  country  concurrently  with  a  decline  in  Brit- 
ish export  trade  certainly  warrants  the  assertion  that  Cob- 
den's prophecy  has  been  refuted,  for  there  was  no  opinion 
more  positively  expressed  by  Cobden  and  his  early  followers 
than  that  the  effects  of  securing  abundant  supplies  of  cheap 
food  and  raw  materials  would  enormously  stimulate  the  ex- 
port of  manufactured  articles  from  Great  Britain. 

As  late  as  1892,  in  a  revised  edition  of  an  American  work 
eulogizing  the  British  free  trade  system,  the  author,  Trum- 
bull, remarked :  "It  is  impossible  to  open  the  national  gates 
to  imports  and  keep  exports  from  escaping  through  the  gap." 
This  was  designed  to  be  satirical,  as  the  added  information 
furnished  by  the  writer  shows:  "Sir  Robert  Peel's  experi- 
ment made  in  1842,  timid  as  it  was,"  he  says,  "proved  this; 
but  neither  Peel,  nor  Cobden,  nor  the  most  sanguine  free 
trader,  could  have  anticipated  that  within    forty-five  years, 

♦Wilson,  The  Growth  of  the  World's  Armaments,  Nineteenth 
Century,  May,   1898. 

Warren,  The  United  States  Export  Trade,  Westminster,  January 
1899.  The  exports  of  the  United  States  for  the  calendar  year  1898  were : 
Merchandise,  $1,254,925,000;  silver  bullion,  $53.797.ooo.  The  latter 
should  be  considered  merchandise. 


540         PROTECTION   AND   PROGRESS 

under  the  stimulus  given  by  free  imports,  the  exports  of 
merchandise  from  Great  Britain  and  Ireland  would  amount 
in  value  to  £248,000,000."*  If  another  edition  of  the  book 
in  question  is  called  for  and  its  author  brings  his  informa- 
tion down  to  date  he  will  have  to  record  a  diminishing  ex- 
port, and  if  he  conscientiously  analyzes  the  cause  he  will 
discover  that  the  dwindling  is  due  to  the  fact  that  "it  is 
impossible  to  open  the  national  gates  to  imports"  in  the 
manner  that  England  does  and  at  the  same  time  maintain 
national  prosperity. 

This  free  trade  writer  when  he  reviews  the  situation  will 
discover  that  his  facetious  allusion  "to  exports  escaping 
through  the  gap"  made  by  imports  does  not  fit  the  existing 
condition.  If  he  studies  modern  methods  he  will  learn  that 
exports  are  made  under  high  pressure,  and  that  the  nations 
most  jealously  guarding  against  the  free  entrance  of  com- 
peting products  are  those  which  are  now  most  successful  in 
forcing  upon  the  rest  of  the  world  their  surpluses  of  manu- 
factures and  products  of  the  soil.  The  cheap  loaf  which 
Cobden  and  the  other  free  traders  set  so  much  store  by  has 
not  served  to  maintain  the  commercial  supremacy  of  Eng- 
land, because  that  country  has  not  been  able  to  preserve 
the  advantage  once  undoubtedly  possessed  by  her  in  the 
superior  labor  efficiency  of  her  working  population. 

In  one  of  his  speeches,  which  has  been  described  as  the 
most  eflfective  ever  made  by  Cobden,  he  declared:  "The 
English  workman  produced  three  times  as  much  for  a  dollar 
as  the  continental  workman  did  for  half  a  dollar. "f  Had 
this  condition  remained  unchanged  there  is  no  doubt  what- 
ever that  the  English  manufacturer  would  have  permanently 
maintained  his  lead,  but  the  competing  Germans  and  Bel- 
gians improved  their  processes  so  rapidly  that  whatever 
differences  may  have  existed  when  Cobden  spoke,  in  later 

♦Trumbull,  The  Free  Trade   Struggle  in   England,  p.  227. 
tibid.p.  74. 


COBDEx\TISM  A  FAILURE  541 

years  it  has  disappeared,  and  now  the  despised  continentals 
are  held  up  as  examples  for  the  British  workingmen  to 
emulate.  English  statesmen  are  now  solemnly  warned 
that  they  must  provide  as  good  technical  schools  as  those 
found  in  Germany  and  other  places  on  the  continent  of 
Europe  if  they  wish  to  produce  manufactured  articles  which 
will  compare  artistically  with  those  sent  out  by  their  com- 
petitors;* and  visiting  delegations  of  British  workingmen 
return  to  England  and  report  to  their  fellows  that  "it  would 
be  absolutely  impossible  to  produce  sheets  (iron)  in  such 
quantity  and  of  such  an  appearance  with  the  appliances  we 
(the  British)  have  at  our  disposal."-}-  This  testimony  is 
striking,  but  still  more  surprising  is  the  statement  that  "it 
was  found  by  the  delegates  of  'British  Iron'  that  for  loading 
plates  German  mechanics  are  paid  at  the  rate  of  a  franc  per 
ton,  whereas  the  Middlesborough  man  gets  only  5^  pence  to 
7  pence.  An  Englishman,"  continues  this  interesting  re- 
port, "employed  at  a  certain  iron  works  in  Germany,  who 
had  once  been  at  Darlington  and  Middlesborough  and  was 
therefore  fitted  to  compare,  discoursed  the  delegates  thus : 
'Undoubtedly  our  men  are  better  off  than  in  England.  We 
pay,  generally  speaking,  higher  wages.  You  have  some  few 
men  who  get  higher  wages  than  any  men  in  our  works ;  but 
over  the  whole  of  the  men  we  get  higher  wages  than  you 
pay.'"  J 

Commenting  on  this  report,  the  author  of  "Made  in 
Germany"  says:  "The  official  statistics  of  wages  in  Ger- 
many may  be  cited  in  confirmation.  These  show — not  only 
that  the  German  worker's  income  averages  very  fairly  with 
the  English  dittos  but — that  the  German's  wages  are  on  a 
pretty  steady  upward  grade ;  which  explains  the  signs  of  a 
higher  standard  of  living  now  noticeable  among  the  German 

*Wiliianis,  Trade  in  Germany,  pp.  3-I53- 
f  Ibid,  p.  43. 
:^Ibid,  p.  41. 


542         PROTECTION  AND  PROGRESS 

people."  These  facts  are  singularly  impressive,  because 
they  testify  to  an  improvement  of  the  standard  of  living  in 
Germany  under  a  protective  system  concurrently  with  a 
struggle  in  England  on  the  part  of  workingmen  for  what  is 
called  "a  living  wage."  If  there  is  any  lesson  to  be  drawn 
from  such  a  state  of  affairs  it  is  that  in  a  protective  country 
the  workingman  has  an  opportunity  to  share  in  the  benefits 
of  modern  improvements  by  raising  his  standard  of  living, 
while  in  a  free  trade  nation  where  a  surplus  of  manufactured 
products  for  which  an  outlet  must  be  had  is  the  usual  feat- 
ure, the  employer,  in  order  to  produce  as  cheaply  as  his 
rivals,  must  constantly  drive  his  workers  to  the  limit  of 
subsistence.  This  deduction  is  fully  sustained  by  the  cir- 
cumstance that  the  recent  great  strikes  in  England  have 
raised  the  question  whether  the  extremities  of  competition 
will  justify  the  worker  in  demanding  what  he  calls  a  "living 
wage,"  which  may  be  interpreted  as  meaning  the  mainte- 
nance of  the  standard  of  living  to  which  the  British  work- 
ingman became  accustomed  during  the  period  of  manufac- 
turing prosperity  in  England. 

The  facts  presented,  and  the  additional  one  that  all  man- 
ufacturing countries  are  sharing  the  real  and  fancied  bene- 
fits of  the  cheap  loaf,  make  it  clear  that  Great  Britain  is 
deriving  no  commercial  advantage  from  the  extraordinary 
cheapening  of  agricultural  products  of  all  kinds,  although 
the  non-producing  classes  possessing  incomes  are  profiting 
by  the  fall.  Not  only  does  England  fail  to  reap  a  special 
benefit,  but  she  has  suffered  immeasurably  by  the  arrested 
development  of  an  industry  which  might  have  been  ex- 
panded sufficiently,  had  a  reasonable  degree  of  protection 
been  afforded,  to  preserve  the  country  from  the  apprehen- 
sion of  being  starved  to  death.  And  incidentally  the  encour- 
agement to  agriculture  would  have  mitigated  the  evils  of 
the  intense  competition  for  a  chance  to  earn  a  livelihood 
caused  by  driving  men  from  the  tillage  of  the  soil  to  English 
cities. 


COBDENISM  A  FAILURE  543 

That  the  competition  between  workers  thus  brought 
about  is  greater  than  some  economists  suppose  will  be  ap- 
parent to  any  one  who  will  take  the  trouble  to  examine  the 
workings  of  trades  unionism  in  England.  A  very  super- 
ficial acquaintance  with  the  literature  of  labor  organization 
will  suggest  the  conclusion  that  the  leaders  and  members 
of  the  unions  are  acting  under  the  pressure  of  apprehension. 
The  stubborn  opposition  to  the  effective  use  of  automatic 
and  other  labor-saving  machinery  so  much  complained  of 
by  English  employers  is  almost  wholly  inspired  by  the  recog- 
nition of  the  fact  by  workers  that  it  is  absolutely  necessary 
to  make  their  combinations  embrace  every  possible  competi- 
tor. That  implies  that  there  will  always  be  an  effort  on 
the  part  of  such  organizations  to  make  a  job  go  as  far  as  it 
can  be  made  to  in  order  that  work  may  be  provided  for  the 
constantly  increasing  number  who  demand  a  chance  to  earn 
a  living. 

Had  tlie  agricultural  industry  not  been  subordinated  to 
that  of  manufacturing  the  pressure  of  population  would 
have  been  less  severely  felt  in  England  than  it  is  at  present 
and  is  likely  to  be  in  the  future.  .  Those  who  have  followed 
the  writings  of  economists  who  discuss  the  remedies  for  the 
wretchedness  resulting  from  the  overcrowding  of  England 
are  apt  to  ask  themselves,  when  they  see  included  among 
them  such  panaceas  as  emigration:  Is  free  trade  really  as 
great  a  blessing  as  the  Cobdenites  would  have  us  believe 
it  is  ?  When  such  a  condition  of  affairs  is  produced  by  an 
industrial  system  that  philanthropists  advocate  the  forcible 
removal  from  the  home  country,  to  colonies  or  other  lands, 
of  pauper  children,  it  is  hard  to  think  well  of  it.  "In  the 
case  of  pauper  children  I  hold,"  says  Rogers,  "that  they  who 
have  put  upon  others  the  charge  of  their  maintenance  have 
morally  forfeited  the  right  to  determine  their  career.  It  is 
the  interest  of  honest  and  industrious  workmen,"  he  adds, 
"that  pauperism  should  be  diminished  as  much  as  possible  in 
the  present  and  obviated  in  the  future  and  that  crime  should 


544         PROTECTION   AND   PROGRESS 

be  isolated  and  watched.  Everything  which  increases  the 
cost  of  administering  human  societies,  and  still  more  every- 
thing which  involves  the  waste  of  wealth,  diminishes  the 
resources  available  for  the  employment  of  industry."* 

It  is  related  of  wolves  that  when  members  of  the  pack 
become  injured  or  enfeebled  to  such  an  extent  that  they  are 
unable  to  care  for  themselves  the  remainder  fall  upon  and 
rend  them.  Perhaps  it  may  be  carrying  the  simile  too  far 
to  say  that  the  suggestion  made  by  Rogers  puts  the  duty 
of  society  on  the  same  plane  as  the  practice  of  wolves,  but 
when  we  reflect  that  the  wretched  paupers  whose  descend- 
ants are  to  be  expatriated  for  the  good  of  society  are  often 
the  victims  of  an  industrial  system  which  works  so  illy  that 
people  go  naked  and  are  starved  because  too  much  clothing 
and  food  is  produced  it  is  permissible  to  use  it.  It  is  the 
proud  boast  of  many  free  traders  that  the  system  they  advo- 
cate has  added  immensely  to  the  national  wealth  and  that 
the  population  of  the  United  Kingdom  has  been  greatly 
increased  through  its  agency.  But  if  the  result  of  this  in- 
crease is  to  give  the  questions  raised  by  Malthus  an  undue 
interest  and  to  make  such  men  as  John  Stuart  Mill  seriously 
discuss  the  propriety  of  passing  laws  to  keep  the  birth  rate 
within  limits  it  is  hardly  a  matter  to  be  referred  to  with 
pride.f 

"In  all  old  countries — all  countries  in  which  the  increase 
of  population  is  in  any  degree  checked  by  the  difficulty  of  ob- 
taining subsistence — the  habitual  money  price  of  labor,"  says 
Mill,  "is  that  which  will  just  enable  the  laborers,  one  with 
another,  to  purchase  the  commodities  without  which  they 
either  cannot  or  will  not  keep  up  the  population  at  the  cus- 
tomary rate  of  increase."  J  That  the  difficulty  here  referred 
to  is  becoming  more  intense  day  by  day  in  Great  Britain 

♦Rogers,  Six  Centuries  of  Work  and  Wages,  p.  s6x. 
fMill,  Principles  of  Political  Economy,  Vol.  II,  p.  432. 
Jlbid,  Vol.  II,  p.  261. 


COBDENISM  A  FAILURE  545 

is  manifest  from  the  increasing  number  of  publications  in 
which  the  doctrines  of  Mahhus  are  respectfully  referred  to 
and  by  the  undoubted  spread  of  socialism  in  the  United 
Kingdom  and  the  extraordinary  means  resorted  to  in  order 
to  relieve  the  pressure  of  population. 

The  English  seem  to  be  unconscious  of  the  fact  that 
they  are  rapidly  marching  along  the  highway  which  Spencer 
and  others  once  fancied  the  people  of  Great  Britain  would 
never  tread.  In  addition  to  the  colossal  pauper  system 
of  indoor  and  outdoor  relief,  we  now  see  the  state  and  its 
political  subdivisions  supplying  the  masses  with  those  util- 
ities which  in  protectionist  countries  are  left  to  individual 
effort.  Herbert  Spencer  at  one  time,  under  the  influence 
of  the  spell  of  Cobdenism,  declared  that  all  interference  of 
this  kind  on  the  part  of  the  state  was  pernicious.  He  went 
so  far  as  to  deprecate  sanitation  at  the  public  charge,* 
taught  that  it  was  a  mistake  to  educate  the  people  at  the 
expense  of  the  community ,t  and  warned  his  readers  to  not 
make  the  mistake  of  thinking  "that  the  apparently  gratui- 
tous instruction  for  his  offspring  would  be  of  no  weight 
with  the  workingman  deliberating  on  the  propriety  of  tak- 
ing a  wife,"|  and  really  seemed  to  believe  that  "the  judg- 
ment of  the  consumer"  would  be  a  sufficient  safeguard  to 
protect  him  against  the  evils  of  adulteration  and  to  prevent 
his  being  imposed  upon  by  predatory  druggists  whose  con- 
science would  permit  them  to  sell  inferior  or  poisonous 
drugs. II  The  attempt  of  the  state  to  interfere  in  any  of 
these  matters  Spencer  thought  would  lead  to  slavery. § 

From  these  grotesque  views  of  the  advocates  of  laissez 
faire,  which  may  easily  be  traced  to  the  mistaken  opinion 
that  it  was  the  abandonment  of  the  corn  laws  which  led 

*Spencer,  Social  Statics,  p.  315. 

fibid,  pp.  166-171. 

JIbid,  p.   177. 

||Ibid,  p.  203. 

gibid,  Man  vs.  the  State,  p.  331. 
35 


546         PROTECTION   AND   PROGRESS 

iii  the  flood  of  wealth  which  has  pouted  into  Great  Britain 
since  their  abrogation,  it  is  interesting  to  turn  to  the  testi- 
mony of  recent  writers  on  municipal  affairs  in  England. 
From  them  we  may  discover  how  rapidly,  under  the  pressure 
of  an  increasing  indigent  population,  the  state  in  England 
is  assuming  functions  which  could  doubtless  be  more  cheaply 
performed  by  individuals,  but  which  the  people  demand 
shall  be  carried  on  by  the  agents  they  select  to  act  for  them 
in  their  collective  capacity.  The  professed  purpose  of  the 
movement  is  to  deprive  individuals  of  the  opportunity  of 
earnmg  profit  at  the  expense  of  the  community,  although 
the  motive  is  somewhat  disguised  by  the  assumption  that 
the  object  is  to  prevent  corruption  in  the  administration  of 
public  affairs.  According  to  Albert  Shaw,  there  are  lodging 
houses  in  Great  Britain  maintained  by  municipalities  which 
entertain  hundreds  of  thousands  of  guests  annually;  public 
hospitals  are  provided  in  Glasgow  and  other  cities ;  san- 
itary officers  now  invade  the  houses  of  individuals  and  in- 
sist that  staircases  and  courts  be  kept  clean ;  water  and  gas 
are  now  generally  supplied  to  householders  in  English  cities 
by  the  municipality,  and  in  some  cities  transportation  facil- 
ities are  provided  by  the  same  agency;  the  state  also  com- 
pels the  companies  operating  steam  roads  to  run  working- 
men's  trains,  and  the  movement  to  provide  better  tenements 
at  the  public  expense  by  tearing  down  rookeries  and  widen- 
ing streets  in  congested  districts  is  growing  rapidly  in  the 
larger  towns  of  the  United  Kingdom.* 

It  may  be  urged  that  these  tendencies  are  also  manifest 
in  the  United  States,  but  whenever  they  show  themselves 
in  this  country  they  are  responsive  to  a  different  motive 
from  that  which  impels  intelligent  Englishmen  to  assent 
to  the  setting  aside  of  the  doctrines  of  laissez  faire.  In  this 
country  any  steps  that  may  be  taken  in  the  direction  of  the 

♦The  American  consul  at  Birmingham,  Eng.,  recently  made  a 
report  in  which  he  declared  that  the  tendency  towards  socialism  in 
Great  Britain  was  very  marked. 


COBDENISM  A  FAILURE  547 

regulation  of  competition  will  not  do  violence  to  the  theory 
of  protection,  for  that  is  based  on  the  assumption  that  the 
general  welfare  may  be  promoted  by  wise  restraint.  But 
free  trade  proceeds  on  the  contrary  idea  that  good  must 
necessarily  result  from  excessive  competition,  as  its  effect 
is  to  lower  the  price  of  commodities,  thus  presumably  bene- 
fiting the  consumer.  Therefore  when  we  see  the  state  in 
Great  Britain  gradually  usurping  all  those  functions  which 
Spencer  and  other  philosophers  of  the  laissez  faire  school 
insist  can  best  be  carried  on  by  individual  exertion  we  must 
assume  that  the  disregard  of  their  teachings  is  due  to  the 
fear  of  the  consequences  of  the  working  of  the  British  in- 
dustrial system  rather  than  to  the  belief  that  a  modified 
form  of  state  socialism,  which  may  lead  to  something  more 
far  reaching,  will  result  in  an  economic  gain. 

It  is  an  ingrained  habit  of  English  historical  writers  to 
attribute  the  decadence  of  the  Roman  Empire  to  the  growth 
of  a  proletariat  supported  at  the  expense  of  the  state. 
Without  undertaking  to  examine  in  detail  all  the  evidence 
which  seems  to  point  to  a  condition  of  affairs  in  Ancient 
Rome  somewhat  different  from  that  usually  assumed  by 
writers,  it  may  be  confidently  asserted  that  it  strikingly 
resembles  that  of  the  England  of  the  present  day.  The 
popular  impression  that  the  masses  in  Rome  were  supported 
at  the  public  expense  is  certainly  erroneous.  That  there 
was  a  large  pauper  element  is  not  questioned,  but  that  it 
was  relatively  larger  than  that  of  Great  Britain  today  there 
is  no  reason  to  believe.  Nor  is  there  any  ground  for  the 
assumption  that  the  distributions  of  corn  and  oil  were  made 
for  the  purpose  of  keeping  the  populace  from  becoming 
dissatisfied  over  the  usurpations  of  the  Emperors.  There 
is  nothing  so  well  established  as  the  antiquity  of  the  system 
of  gratuitous  distribution.  "Corn  was  distributed  to  the 
poor  of  Rome  from  very  early  times  in  the  temple  of  Ceres, 
under  the  superintendence  of  the  Aediles  Cereales,  whose 
office  appears  to  have  been  almost  similar  to  that  of  the 


548  PROTECTION  AND  PROGRESS 

British  poor  law  commissioners."*  In  later  times,  when, 
as  the  result  of  conquests,  Rome  was  deluged  with  corn, 
the  Tribunes  of  the  people  fixed  the  price  at  which  it  should 
be  sold  from  the  public  granaries  to  the  commonalty  at  a 
sum  equal  to  about  one-half  penny  a  peck.  This,  we  are 
told,  "was  only  one-fourth  the  current  price,"  a  bit  of  in- 
formation which  forces  the  conclusion  that  only  a  limited 
number  of  the  commonalty,  perhaps  the  very  poor,  were 
permitted  to  buy  on  the  terms  indicated,  for  if  the  masses 
could  have  obtained  grain  at  the  price  named  a  current  rate 
four  times  as  great  could  not  have  been  maintained.  Still 
later,  we  find  accounts  of  corn  distributions  which  will  not 
permit  the  assumption  that  they  were  as  general  as  has  been 
claimed. 

Gibbon  relates  that  "Severus  considered  the  Roman  Em- 
pire as  his  property"  and  that  "in  the  administration  of  jus- 
tice the  judgments  of  the  Emperor  were  characterized  by 
attention,  discernment  and  impartiality,  and  whenever  he 
deviated  from  the  strict  line  of  equity  it  was  generally  in 
favor  of  the  poor  and  oppressed ;  not  so  much,  indeed,  from 
any  sense  of  humanity  as  from  the  natural  propensity  of  a 
despot  to  humble  the  pride  of  greatness  and  to  sink  all  his 
subjects  to  the  same  common  level  of  absolute  dependence. 
His  expensive  taste  for  building  magnificent  shows,  and, 
above  all,  a  constant  and  liberal  distribution  of  corn  and 
provisions,  were  the  surest  means  of  captivating  the  affec- 
tions of  the  Roman  people.  The  misfortunes  of  civil  discord 
were  obliterated.  The  calm  of  peace  and  prosperity  was 
once  more  experienced  in  the  provinces ;  and  many  cities, 
restored  by  the  munificence  of  Severus,  assumed  the  title 
of  his  colonies  and  attested  by  public  monuments  their  grati- 
tude and  felicity."! 

This  view  of  Gibbon  may  be  regarded  as  the  one  ordi- 


*Gibbon,  History  of  Rome,  foot-note  Bohn  edition,  Vol.  II,  p.  193. 
tibid,  Vol.  I,  p.  156,  Chap.  V. 


COBDENISM  A  FAILURE  549 

narily  accepted,  but  it  will  hardly  bear  analysis.  It  would 
not  be  difficult  to  believe  that  an  absolute  monarch  might 
attempt  to  maintain  his  popularity  in  the  capital  by  shower- 
ing favors  on  the  subjects  in  his  immediate  vicinity,  thus 
preventing  seditious  uprisings,  but  no  reasonable  person  will 
accept  the  conclusion  that  Septimus  Severus  could  have 
stripped  the  provinces  for  the  benefit  of  the  proletariat  of 
the  city  of  Rome  and  at  the  same  time  secure  the  gratitude 
and  promote  the  felicity  of  the  provincials.  If,  concurrently 
with  the  assumed  gratuitous  feeding  of  the  masses  in  the 
capital  city,  there  had  been  trouble  and  want  in  the  provinces 
we  might  accept  the  conclusion  that  it  was  Roman  policy  to 
support  men  in  idleness,  but  the  assertion  that  calm  and 
prosperity  reigned  outside  of  the  city  forbids  such  an  as- 
sumption. 

No  doubt  a  more  correct  view  of  the  corn  and  other 
distributions  is  that  they  were  rendered  necessary  by  the 
ill  workings  of  an  economic  system  which  differs  less  from 
that  of  modern  times  than  is  commonly  supposed.  Although 
it  is  assumed  by  many  writers  that  Rome  was  a  vast  hive  of 
drones,  there  is  abundant  evidence  that  it  was  really  a  great 
industrial  center  and  that  its  poverty  was  as  much  enforced 
as  that  of  the  submerged  of  London.  If  this  was  the  case 
we  can  readily  perceive  that  what  is  regarded  by  some  as 
the  result  of  despotism  was  really  the  outcome  of  a  policy 
analogous  to  that  which  prompts  England  to  take  care  of  her 
vast  pauper  population  at  the  public  expense  and  causes  her 
to  contemplate  the  erection  of  public  granaries.  Speaking 
of  the  later  empire  Gibbon  says:  "Whenever  the  seasons 
were  less  propitious  the  doubtful  expedient  of  forming 
magazines  of  corn,  fixing  the  price  and  prohibiting  the  ex- 
portation attested  at  least  the  benevolence  of  the  state."* 
It  is  possible,  however,  that  benevolence  was  a  secondary 
motive  and  that  the  primary  one  was  the  safety  of  the  state. 

**Gibbon,  History  of  Rome,  foot-note  Bohn  edition,  Vol.  IV,  p.  271, 
Chap.  39. 


550        PROTECTION  AND  PROGRESS 

In  short,  the  granaries  were  a  mihtary  necessity,  and  their 
erection  led  to  the  practice  of  the  fixing  of  prices  which 
descended  from  very  remote  times.  It  is  not  at  all  improh- 
able  that  the  Romans  might  have  escaped  the  injurious 
effects  of  Government  interference  with  the  operations  of 
the  markets  if  the  huge  military  operations  of  the  empire 
had  not  necessitated  the  adoption  of  extraordinary  precau- 
tions to  insure  steady  supplies  of  food  for  the  armies  and 
for  the  people  whose  industries  were  liable  to  be  interrupted 
at  any  time  by  warlike  troubles. 

Whether  Great  Britain's  proposed  experiment  of  estab- 
lishing granaries  for  supplying  the  people  with  breadstuffs 
in  case  of  an  emergency  will  lead  to  such  results  as  those 
described  is  something  the  future  alone  can  determine,  but 
that  the  outcome  may  prove  disastrous  to  the  principle  of 
competition  can  hardly  be  doubted.  A  nation  that  now 
gratuitously  feeds  in  public  establishments  nearly  a  million 
paupers  may  easily  take  the  step  of  selling  at  cost  or  under 
cost  to  a  distressed  people.  There  is  nothing  more  likely 
than  the  adoption  of  some  such  plan  if  the  granary  idea  is 
resorted  to.  In  that  event,  should  there  be  an  artificial 
scarcity  due  to  blockade  or  any  other  cause,  the  Government 
would  hardly  be  able  to  sell  at  a  profit.  Public  opinion 
would  not  permit  such  a  course.  The  demand  would  be  for 
cheapness,  and  the  Government  would  have  to  respond  to 
it.  The  practice  once  inaugurated,  its  continuance  would 
be  insisted  upon,  and  under  the  pretense  of  insuring  the 
people  a  steady  supply  of  corn  the  state  would  become  the 
regulator  of  prices. 

But  expedients  of  this  kind  will  be  powerless  to  avert 
the  effects  of  the  congested  condition  brought  about  by  the 
undue  stimulus  of  manufacturing  in  England.  Ancient 
Rome,  in  her  last  gasps,  had  cheaper  corn  than  the  British 
may  hope  to  obtain,  but  cheap  as  food  was  the  Romans  were 
unable  to  buy  it.  It  has  been  suggested  that  where  the  con- 
ditions of  a  high  industrial  development  exist,  as  they  do 


COBDENISM  A  FAILURE  551 

in  England,  decay  is  impossible;  that  a  branch  here  and 
there  may  wither,  but  that  the  tree  will  put  forth  fresh 
shoots  and  grow  more  vigorously  than  ever.  No  doubt  Sir 
Robert  Gift'en  holds  to  this  view,  as  do  many  other  free 
traders  who  treat  with  contemptuous  indifference  allusions 
to  the  injury  which  English  agriculture  has  suffered,  and 
who  answer,  when  their  attention  is  called  to  the  decline  of 
the  British  manufacture  of  silk  and  linen  and  the  disappear- 
ance of  sugar  rejfineries  from  the  United  Kingdom,  that  they 
would  not  have  met  their  adverse  fate  unless  they  de- 
served it. 

Doubtless  this  method  of  disposing  of  the  matter  seems 
the  proper  one  to  those  who  still  retain  the  belief  that  under 
any  and  all  circumstances  the  vast  quantity  of  capital  accu- 
mulated by  the  British  will  be  used  in  the  promotion  of 
some  form  or  other  of  English  industry,  and  that  the  growth 
of  the  population  of  the  world,  and  the  development  of  its 
vast  and  varied  resources,  will  always  give  profitable  em- 
ployment to  ingenious  Britons.  That  this  view  is  not  sound 
is  suspected  by  some  and  will  finally  be  recognized  by  all 
Englishmen. 

Those  who  have  assumed  that  the  circumstances  will 
always  be  such  that  the  British  will  be  able  to  find  profitable 
employment  at  home  for  their  capital  overlook  the  possi- 
bilities that  have  suggested  themselves  to  Mallock,  who,  in 
his  discussion  of  socialistic  problems,  has  admitted  that 
the  extinction  of  England's  coal  measures  would  necessarily 
be  followed  by  a  diminution  of  population.  Mr.  Mallock 
speaks  of  exhaustion,  but  the  practical  effect  so  far  as 
commercial  supremacy  is  concerned  will  be  the  same  when 
it  is  no  longer  possible  for  the  British  to  mine  coal  in  com- 
petition with  other  peoples.  In  that  event  the  result  fore- 
shadowed must  take  place.  When  England  can  no  longer 
secure  abundant  supplies  of  cheap  fuel  her  trade  must  de- 
cline and  "the  more  energetic  of  the  superfluous  inhabitants 
will  emigrate  of  their  own  accord,"  while  the  propriety  of 


SS2        PROTECTION  AND  PROGRESS 

somehow  deporting  "the  less  energetic"  will  have  to  be  con- 
sidered.* 

The  imminence  of  this  state  of  affairs  has  an  important 
bearing  on  Sir  Robert  Giffen's  assumption  that  free  trade 
is  gaining  ground  throughout  the  world.  It  is  incredible 
that  in  the  face  of  a  condition  such  as  that  suggested  by 
observation  of  the  fact  that  the  British  coal  mines  are  being 
worked  at  a  constantly  increasing  cost  the  statesmen  of  other 
countries  should  relax  their  efforts  to  provide  themselves 
with  cheaper  supplies  of  the  source  of  energy.  This  means 
that  the  policy  of  developing  domestic  resources  by  the 
aid  of  protection  must  be  continued  so  that  the  dearer  coal 
may  not,  by  the  adventitious  aid  of  capital,  be  imposed  on 
countries  which  have  an  abundance  of  undeveloped  fuel 
inviting  exploitation  and  offering  profit  to  those  who  accept 
the  invitation. 

In  a  recent  English  review  article  on  the  coal  supplies 
of  the  world  the  writer,  reviewing  the  progress  made  in 
mining  by  the  different  nations  and  the  trade  in  coals,  re- 
marked: "As  yet  the  United  States  have  not  done  much 
in  the  way  of  exporting  coal — only  two  or  three  million  tons 
per  annum,  chiefly  to  Canada  and  the  West  Indies ;  but 
that  is  because  the  increase  in  production  has  only  kept 
pace  with  the  domestic  consumption.  Yet  the  development 
has  been  extremely  rapid — from  99,000,000  tons  in  1885  to 
178,000,000  tons  in  1897 — an  increase  of  75  per  cent  in  a 
dozen  years.  To  put  it  otherwise,  the  output  of  the  United 
Kingdom  in  1885  was  159,351,000  tons  and  in  1897  202,- 
129,932  tons — an  increase  of  42,778,931  tons.  The  output 
of  the  United  States  in  1885  was  99,069,000  tons  and  in 
1897  178,000,000  tons — an  increase  of  78,931,000  tons,  or 
nearly  double  ours.  At  this  rate  of  progression  there  is  little 
room  for  doubt  that  the  United  States  will  soon  take  our 
place  as  the  largest  coal  producer  in  the  world.    And  then 


*Mallock,  Altruism  in  Economics,  Forum,  August,   1896. 


COBDENISM  A  FAILURE  553 

America  will  become  our  most  formidable  competitor  in  the 
Atlantic,  and  possibly  even  in  the  Mediterranean,  coal  trade ; 
for  it  will  be  as  easy  to  replenish  many  of  the  coaling  stations 
and  some  of  the  continental  ports  from  Newport  News  as 
from  Cardiff."* 

In  addition  to  this  information  the  writer  supplies  many 
facts  tending  to  show  the  general  diffusion  of  coal  through- 
out the  world,  his  purpose  being  to  determine  as  nearly  as 
possible  the  extent  and  nature  of  the  competition  which 
Great  Britain  must  in  future  expect  in  the  industry  of  fur- 
nishing coal  to  foreign  peoples.  Among  other  things,  he 
found  that  of  the  world's  coal  supply  of  574,000,000  tons  in 
1897  the  British  Empire  furnished  217,000,000  tons,  or,  say, 
38  per  cent.  "Our  only  close  competitor,"  he  adds,  "is  the 
United  States,  and,  putting  aside  that  country  as  one  with 
whom,  as  Mr.  Chamberlain  says,  we  ought  to  combine  in 
bonds  of  permanent  amity,  we  still  have  more  coal  than  all 
the  other  powers  put  together.  As  coal  gives  sea  power  our 
future  in  the  Pacific  and  in  the  East  depends  on  the  re- 
sources of  British  India,  British  Columbia  and  Australasia, 
and  on  our  relations  to  the  unplumbed  depths  of  the  Chinese 
coal  seams,  not  on  the  whims  and  vagaries  of  Welsh  and 
English  colliers. "t 

The  effect  of  the  waste  of  energy  caused  by  the  ex- 
ploitation of  coal  measures  for  the  purpose  of  stimulating 
manufactures  for  export  has  been  described  elsewhere  in 
these  pages,  but  the  probable  result  of  the  competition  to 
which  Taylor  alludes  may  be  referred  to  here  with  advan- 
tage. The  careful  reader  of  this  article  will  not  fail  to  note 
that  his  discussion  merely  goes  to  the  matter  of  future  sea 
power  and  that  he  fails  to  consider  the  question :  What  will 
happen  when  the  United  Kingdom  no  longer  finds  it  profit- 


*Taylor,   The   Coal   Supplies   of   the   World,    Nineteenth    Century, 
July,  1898. 
•j-Ibid. 


554        PROTECTION  AND  PROGRESS 

able  to  ship  coals  to  those  regions  which  are  now  the  prin- 
cipal customers  for  the  British  coals  exported? 

If  Mr.  Arthur  Peel,  secretary  of  the  British  Embassy 
at  Washington,  does  not  exaggerate  when  he  says :  "On 
the  one  hand,  the  almost  unlimited  resources  of  the  coal 
fields  of  the  United  States,  the  excellence  of  the  quality  of 
coal,  the  possibilities  of  greater  economy  in  the  system  of 
mining  and  greater  reduction  in  the  cost  of  freight;  and, 
on  the  other  hand,  the  immense  amount  of  coal  consumed 
within  the  United  Kingdom,  the  recent  increase  in  the 
average  of  value  at  the  pit's  mouth  *  *  *  are  consider- 
ations which  tend  possibly  in  the  direction  of  trade  relations 
of  such  a  nature  abroad  as  may  result  in  a  great  development 
of  the  export  of  coal  from  the  United  States,"*  the  changes 
in  the  coal  industry  which  Mr.  Taylor  recognizes  and  de- 
scribes may  operate  in  a  fashion  which  he  does  not  foresee. 
These  changes  will  not  only  greatly  interfere  with  the  ex- 
tension or  maintenance  of  British  sea  power,  but  they  will 
make  its  maintenance  unnecessary. 

In  1896  the  coal  shipments  of  Great  Britain  constituted 
84.7  per  cent  of  the  entire  volume  of  British  exports.  Ac- 
cording to  trustworthy  calculations,  these  exports  formed 
"over  50  per  cent  of  the  tonnage  cleared  from  the  United 
Kingdom."!  If  the  44,200,000  tons  of  coal  shipped  in  the 
year  named  gave  employment  to  half  of  the  tonnage  flying 
the  British  flag,  and  if,  as  further  asserted  by  an  authority 
previously  quoted,  a  transitory  gain  of  exports  in  1896  was 
almost  wholly  due  to  increased  shipments  of  coal,  the  ques- 
tion naturally  arises :  What  will  happen  to  the  maritime 
industry  of  England  when  that  country  finds  it  impossible 
to  successfully  compete  with  the  United  States  and  other 
nations  in  the  production  of  coal?  It  is  a  question  which 
answers  itself.     When  that  time  arrives  there  will  be  an 

♦Taylor,  The  Coal  Supplies  of  the  World,  Nineteenth  Century,  July, 
1898. 

Bellairs,  China  Mail,  Hongkong,  September  18,  1897, 


COBDENISM  A  FAILURE  555 

enormous  shrinkage  of  British  tonnage.  Nothing  is  clearer 
than  the  fact  that  the  immense  production  of  British  coal 
and  its  distribution  has  called  into  existence  a  vast  fleet 
of  vessels,  the  necessity  for  which  will  disappear  when 
American  or  other  coal  supplants  the  product  of  Great  Brit- 
ain in  the  markets  to  which  the  latter  country  is  now  carry- 
ing her  surplus  fuel. 

It  must  be  obvious  that  when  the  United  States  reaches 
that  point  in  coal  production  which  will  make  it  expedient 
to  ship  large  quantities  to  foreigners  the  shipments  will 
be  made  in  vessels  built  and  owned  in  this  country.  What- 
ever may  have  once  been  thought  of  our  supposed  inability 
to  construct  vessels  as  cheaply  as  England,  all  doubts  on 
that  score  have  now  disappeared.  The  fact  that  we  are 
shipping  steel  plates  to  Glasgow,  and  the  testimony  of  Yar- 
row, quoted  elsewhere,  to  the  effect  that  the  efficiency  of 
American  labor  and  the  use  of  automatic  machinery  more 
than  compensates  for  any  advantage  which  the  British  ship- 
builder may  appear  to  have  because  the  wages  of  his  work- 
ingmen  are  nominally  lower,  have  completely  destroyed  the 
argument  in  favor  of  free  ships.  It  is  now  seen  that  when 
the  conditions  of  shipping  become  so  adjusted  as  to  create 
an  enlarged  demand  for  American-built  vessels  the  numer- 
ous shipyards  in  this  country,  with  their  constantly  expand- 
ing plants  and  growing  efficiency,  will  be  able  to  supplj 
tonnage  more  cheaply  than  those  of  any  other  country. 

The  necessity  of  finding  an  outlet  for  the  coal  which  is 
certain  to  be  produced  in  excess  of  the  country's  needs  will 
bring  about  the  trade  adjustment  spoken  of.  When  Argen- 
tina, to  illustrate,  finds  it  more  profitable  to  take  the  bulk  of 
her  coal  from  the  United  States  than  from  England  she 
will  cease  to  ship  her  wool  to  the  latter  country.  It  will 
pay  her  better  to  give  the  American  vessels  bringing  coal 
return  cargoes.  The  change  thus  effected  will  lead  to  others. 
The  British  vessels  carrying  the  44,000,000  tons  of  coal 
exported  to  foreign  countries  in  1896  also  carried  other 


556         PROTECTION  AND  PROGRESS 

merchandise;  when  the  coal  shipments  diminish  or  cease 
it  will  be  impossible  to  ship  miscellaneous  goods  on  the  same 
favorable  terms  as  at  present,  and  as  a  consequence  Great 
Britain  will  have  to  surrender  a  large  part  of  that  round- 
about trade  which  has  been  so  profitable  to  her  and  so  very 
unprofitable  to  those  nations  who,  by  competition  of  this 
kind,  have  been  deprived  of  the  benefits  of  direct  intercourse 
with  other  peoples. 

There  is  one  thing  which  may  prove  an  obstacle  to  the 
development  of  a  great  ocean  carrying  trade  by  a  country 
in  which  protection  has  raised  the  plane  of  wages.  It  is 
referred  to  by  J.  Stephen  Jeans  in  his  book  on  the  Indus- 
trial Supremacy  of  England,  a  work  rarely  referred  to  by 
the  writer  or  any  one  else  in  these  days.  Mr.  Jeans  assumed 
that  the  infinitely  higher  range  of  seamen's  wages  paid  by 
Americans  would  be  an  effectual  barrier  to  successful  com- 
petition with  foreigners  in  the  oversea  carrying  trade,  but 
it  is  quite  possible  that  fhe  same  methods  adopted  to  over- 
come the  disparities  in  wages  paid  workers  in  the  iron 
and  steel  industry  of  this  country  may  have  an  equally  suc- 
cessful result  when  applied  to  ocean  commerce. 

One  of  the  anomalies  of  the  American  protective  system 
is  its  failure  to  apply  to  the  shipping  industry  of  the  United 
States  the  policy  which  has  proved  so  efficacious  in  building 
up  a  great  manufacturing  industry.  The  failure  is  the 
more  striking  because  all  careful  observers  regard  the  neu- 
tralization of  the  practice  of  foreign  Governments  of  en- 
couraging the  extension  of  ocean  commerce  by  means  of 
direct  and  indirect  subsidies  as  a  condition  precedent  to 
the  creation  of  a  great  American  ocean  carrying  business. 

It  is  possible  that  this  latter  assumption  may  be  incor- 
rect, and  that  we  have  in  our  enormous  deposits  of  coal 
and  iron  and  our  facilities  for  working  them  on  a  greater 
scale  and  consequently  more  cheaply  than  other  people,  just 
such  an  advantage  as  that  which  has  given  the  English 
supremacy  for  many  years.    If  Great  Britain,  by  reason  of 


COBDENISM  A  FAILURE  557 

these  superior  advantages,  has  been  able  to  whiten  the  seas 
with  her  sails  and  to  darken  the  sky  with  the  smoke  from 
her  coal-burning  steamers,  what  may  we  not  expect  to  do 
when  our  growing  capital  exerts  itself  to  find  an  outlet  for 
a  productivity  which  must  result  from  the  development  of 
our  infinitely  greater  resources  ?  With  iron  ores  of  a  higher 
percentage  of  purity  than  those  found  in  any  other  compet- 
ing country,  taken  from  deposits  of  almost  inexhaustible 
extent  and  extracted  at  a  cost  so  low  as  to  amaze  rivals; 
with  coal  supplies  so  abundant,  and  the  means  of  getting 
them  to  the  consumer  so  well  developed  that  English  trade 
journals  admit  that  "the  lowest  average  of  cost  of  produc- 
tion in  the  United  Kingdom,  that  of  Durham  and  Scotland, 
is  more  than  30  per  cent  higher  than  the  average  of  Penn- 
sylvania,"* and  with  rolling  mills  and  other  appliances  for 
working  up  iron  and  steel  on  a  scale  hitherto  undreamed  of, 
we  may  succeed  in  offsetting  the  lower  wages  and  the  arti- 
ficial aid  rendered  by  foreigners  to  transportation  lines  called 
into  existence  to  assist  in  finding  markets  for  the  surplus 
products  of  manufacture  of  the  countries  resorting  to  this 
policy. 

But  whatever  drawbacks  may  arise  from  the  failure  to 
meet  the  subvention  policy  of  foreigners,  they  will  not  be 
attributed  by  reasonable  men  to  the  operation  of  protection, 
but  rather  to  neglect  of  its  principles.  It  is  possible  that 
the  considerations  above  advanced  may  have  the  effect  of 
inducing  this  country  to  persevere  in  the  policy  of  abstaining 
from  direct  efforts  to  promote  the  American  ocean  carrying 
trade,  but  it  will  ultimately  be  recognized  as  a  mistaken  one. 
The  facts  set  forth  in  the  chapters  devoted  to  exhibiting 
the  economic  wastefulness  of  the  system  of  promoting  for- 
eign trade  at  the  expense  of  the  development  of  the  resources 
of  the  different  countries  of  the  world  ought  to  convince 
the  most  obtuse  advocate  of  the  theory  that  the  mere  ex- 

*Iron  and  Coal  Trades  Review,  London,  April,  1898. 


558         PROTECTION  AND  PROGRESS 

change  of  articles  is  of  more  consequence  than  then"  pro- 
duction that  the  best  interests  of  mankind  would  be  sub- 
served by  a  rigorous  adherence  on  the  part  of  the  United 
States  to  the  policy  of  protection  in  the  matter  of  ocean 
shipping.  If  the  efforts  of  such  a  policy  would  be  a  blessing 
to  future  generations  of  Britons  by  saving  them  from  the 
consequences  which  their  scientific  advisers  say  will  follow 
the  exhaustion  of  the  coal  supplies  of  the  United  Kingdom, 
we  ought,  as  a  humane  people,  to  interfere  in  their  behalf. 
We  can  best  do  this  by  preventing  the  shipment  of  vast 
quantities  of  British  coal  to  foreign  countries,  and  by  caus- 
ing a  diminution  of  the  quantity  consumed  by  English 
steamers,  which  can  be  affected  by  substituting  American 
for  British  carriers. 

There  is  no  disposition  to  be  facetious  in  making  this 
suggestion.  It  is  simply  thrown  out  because  Sir  Robert 
Giffen  and  other  free  traders  seem  unable  to  comprehend 
that  by  advocating  the  further  extension  of  British  trade 
they  are  inducing  their  countrymen  to  incur  great  future 
inconveniences  for  a  present  gain.  Their  course  suggests 
a  paraphrase  of  the  parable  of  the  ten  virgins.  The  day 
must  come  when  Great  Britain  will  say :  "Give  us  of  your 
coal,  for  our  mines  are  exhausted,"  but  the  competitor  may 
refuse  to  comply  on  any  other  conditions  than  such  as  must 
of  necessity  bring  about  the  result  suggested  by  Mallock 
when  he  declared  that  if  England  could  not  maintain  her 
population  of  40,000,000  she  would  have  to  deport  the  sur- 
plus and  get  along  with  12,000,000. 

These  reflections  are,  of  course,  incompatible  with  the 
ideas  advanced  by  Giffen,  but  that  they  are  far  more  reason- 
able and  more  accurately  foreshadow  the  trend  of  future 
events  than  his  remarks,  in  which  he  claimed  that  Cobden- 
ism  had  triumphed  and  that  the  future  would  witness  a 
general  acceptance  of  the  doctrine  of  the  Manchester  school, 
many  of  his  countrymen  orally  or  by  action  do  not  hesitate 
to  admit.    That  they  will  all  be  forced  one  day  to  recognize 


COBDENISM  A  FAILURE  559 

the  indestructible  truth  that  there  can  be  no  true  gain  to 
mankind  through  waste  is  inevitable,  and  no  more  convinc- 
ing object  lessen  illustrating  this  observation  will  ever  be 
furnished  than  the  marvelous  development  of  the  resources 
of  the  United  States  under  the  protective  system,  an  effort 
to  describe  which  will  be  made  in  the  next  and  concluding 
chapter. 


CHAPTER  XXII. 

TRIUMPH  OF  PROTECTION. 

THE    REMARKABLE    INDUSTRIAL    RESULTS    ACHIEVED    BY    PRO- 
TECTIVE COUNTRIES. 

Accumulations  of  the  British  likely  to  prove  detrimental  to  the  work- 
ingman — Facility  with  which  the  British  have  raised  up  rivals 
for  themselves  by  investing  abroad — The  process  of  cheapening 
liable  to  prove  of  greater  benefit  to  the  rivals  of  Great  Britain 
than  to  Englishmen — Change  in  the  character  of  American  ex- 
ports— The  United  States  as  a  competitor  in  the  British  home 
market — The  effects  of  a  protective  tariff  on  consumption — 
Enormous  increase  of  the  use  of  iron  in  the  United  States — In- 
creased production  of  manufactured  articles  since  1840  in  protec- 
tive countries — The  addition  to  the  American  volume  of  pro- 
duction between  i860  and  1894  five  times  as  much  as  that  of  Great 
Britain  during  the  same  years — The  creation  of  great  manufac- 
turing plants  results  in  enormously  stimulatnig  consumption — 
The  internal  trade  of  the  United  States  compared  with  the  ex- 
ternal trades  of  the  world — The  wholesome  effects  of  self-de- 
pendence— Present  condition  of  Great  Britain — Uninterrupted 
supplies  of  raw  materials  a  condition  of  national  existence — 
Practical  invulnerability  of  a  protectionist  country  with  well 
developed  resources — The  development  of  manufacturing  did 
not  impede  but  promoted  the  expansion  of  American  agricul- 
ture— A  comparison  of  the  growth  of  wealth  in  the  United 
States  and  in  Great  Britain — The  people  of  the  United  States 
possess  one-fourth  of  all  the  wealth  of  the  world — Effects  of 
protection  on  the  future  of  Russia — The  true  purpose  of  pro- 
tectionists— Protection  is  the  economic  policy  that  must  endure 
because  it  is  an  eliminator  of  waste. 

No  more  fitting  method  of  concluding-  a  work  which  has 
been  largely  devoted  to  the  exposure  of  the  fallacies  of 
the  Manchester  school  could  be  adopted  than  to  show,  chiefly 

560 


TRIUMPH  OF  PROTECTION  561 

by  means  of  British  evidence,  that  in  spite  of  the  vaunted 
advantages  of  free  trade  and  the  assumed  disadvantages  of 
protection  the  countries  which  have  adopted  the  latter  eco- 
nomic poHcy  have  made  greater  material  advances  than 
England,  the  solitary  exemplar,  on  a  scale  worthy  of  compar- 
ison, of  the  doctrine  that  the  exchange  of  things  produced 
is  of  more  consequence  than  the  production  of  things  ex- 
changed. 

In  the  preceding  chapter  testimony  was  presented  show- 
ing that  there  is  a  growing  opinion  in  England  that  it  will 
be  impossible  for  that  country  to  maintain  a  population 
as  large  as  that  now  inhabiting  the  British  Isles  when  their 
coal  measures,  which  have  heretofore  been  the  great  source 
of  prosperity,  are  exhausted,  or  reduced  to  such  a  condition 
that  it  will  be  unprofitable  to  work  them  in  competition 
with  those  of  other  countries  whose  deposits  of  fuel  have 
thus  far  remained  practically  untouched.  While  the  con- 
tingency referred  to  and  its  consequences  are  foreseen  and 
commented  upon  by  Englishmen  who  are  not  blinded  to 
facts  by  an  ism,  few  or  none  of  them,  so  far  as  we  have 
observed,  have  been  impressed  by  the  possibility  that  the 
phenomenal  prosperity  of  the  United  Kingdom,  which  en- 
abled her  citizens  to  accumulate  great  capitals  while  other 
peoples  were  laboriously  building  up  competing  manufac- 
turing industries,  will  immensely  accelerate  the  industrial 
decadence  of  Great  Britain. 

In  another  connection  testimony  was  introduced  which 
exhibited  the  fact  that  much  of  this  accumulation  has  been 
employed  to  assist  in  the  development  of  the  resources  of 
other  and  competing  countries,  and  that  the  earnings  of 
the  capital  thus  invested  are  often  paid  in  the  produce  of 
the  country  where  the  investment  is  made,  which  produce 
is  shipped  to  the  United  Kingdom  there  to  be  consumed  by 
British  workingmen  and  the  non-producing  classes.  While 
the  conditions  were  such  as  to  make  it  more  profitable  to 
import  raw  materials  and  food  staples  of  a  kind  designed 

36 


562         PROTECTION  AND  PROGRESS 

for  the  consumption  of  the  working  classes,  this  process 
necessarily  redounded  to  the  advantage  of  British  industry. 
But  when  the  imports  into  Great  Britain  ceased  to  be  mostly 
of  that  character,  and  instead  of  raw  materials  finished 
products  manufactured  in  other  countries  began  to  be  im- 
ported in  larger  and  larger  quantities,  the  British  working- 
man  suffered. 

In  the  chapter  in  which  the  decadent  industries  of  Great 
Britain  were  discussed  it  was  shown  that  the  annual  im- 
portations of  manufactured  goods,  which  for  a  long  time 
have  exceeded  a  hundred  millions  sterling  annually,  was 
responsible  for  the  shutting  down  of  many  English  factories, 
and  that  the  outlook  for  additional  closures  was  such  as  to 
cause  many  competent  critics  to  regard  the  situation  as 
threatening.  This  tendency  to  supplant  imports  of  raw 
materials  and  staple  food  stuffs  with  finished  articles  of 
all  kinds  and  food  luxuries  for  the  tables  of  the  well-to-do 
must  rapidly  increase  in  the  future. 

It  may  seem  to  Englishmen  that  the  opening  of  a  fresh 
continent  to  trade  and  the  exploitation  of  the  Orientals  will 
arrest  the  tendency,  but  a  little  reflection  will  convince  any 
thoughtful  person  that  whatever  advantages  might  have  ac- 
crued from  these  new  or  increasing  fields  of  trade  are  more 
than  offset  by  the  enormous  increase  of  manufacturing 
productivity  in  other  and  competing  countries.  An  impar- 
tial consideration  of  all  the  existing  circumstances,  not  omit- 
ting those  deemed  to  be  encouraging,  leads  irresistibly  to  the 
conclusion  that  the  future  will  witness  in  England  a  con- 
tinuous enlargement  of  the  demands  of  the  well-to-do  Brit- 
ish consumer  for  foreign  goods  which  will  involve  a  disre- 
gard of  the  needs  of  the  toiling  producer.  This  process 
will  continue  until  the  accumulations  of  a  period  of  pros- 
perity have  been  dissipated,  and  then  the  United  Kingdom 
will  share  the  fate  of  other  world  empires  the  controllers 
of  whose  destinies  were  unable  to  overcome  the  tendency 
of  their  dependent  subjects  to  emancipate  themselves  from  a 


TRIUMPH  OF  PROTECTION  563 

state  of  commercial  or  political  bondage.  In  short,  when 
Great  Britain  ceases  to  be  commercially  supreme  she  will 
be  unable  to  hold  her  possessions. 

In  these  concluding  paragraphs  the  attentive  reader  will 
more  than  once  be  reminded  by  the  significant  facts  and 
figures  which  will  be  produced  that  Great  Britain  has  been 
impelled  by  the  force  of  economic  circumstances  to  pursue 
a  course  that  suggests  an  indiscretion  analogous  to  that  of 
a  country  supplying  with  arms  of  precision  the  people  of  a 
state  she  purposes  to  make  war  upon.  Comparisons  of  this 
kind,  we  know,  are  distasteful  to  free  traders,  who  seek  in 
defiance  of  the  teachings  of  history  and  existing  circum- 
stances to  maintain  that  commerce  implies  peace  and  good 
will,  but  their  objections  will  not  detract  from  the  truthful- 
ness of  the  assertion  that  the  freedom  with  which  the  British 
have  loaned  their  capital  to  foreigners  for  the  purpose  of 
promoting  rival  industries  is  certain  to  prove  as  destructive 
to  British  commercial  supremacy  as  the  act  of  the  Spanish 
conquistadores  might  have  proved  to  their  rule  in  Mexico 
and  Peru  had  they  supplied  the  natives  of  those  countries 
with  firearms  and  taught  them  their  use. 

The  impulse  to  employ  capital  is  irresistible,  and  as 
profitable  results  may  follow  its  employment  by  a  rival 
who  borrows  it  as  when  it  is  used  by  its  possessor.  The 
English  have  invaded  this  country  with  their  accumulations 
and  have  thereby  been  largely  instrumental  in  promoting 
the  development  of  its  resources.  They  have  assisted  in 
making  waste  places  fertile,  and  we  have  repaid  them  by 
making  agriculture  an  unprofitable  pursuit  in  England.  It 
is  true  that  the  flood  of  cheap  products  with  which  we  have 
deluged  Great  Britain  has  given  the  workingman  cheap 
bread  and  cheap  meat,  but  it  has  also  intensified  the  severity 
of  the  struggle  which  has  for  a  long  period  marked  the  get- 
ting of  food  and  raiment  by  the  English  masses  by  releasing 
from  the  soil  a  large  contingent  of  toilers  who  have  pressed 
into  the  towns  as  their  only  refuge  from  starvation.     The 


564         PROTECTION  AND  PROGRESS 

English  have  also  assisted  us  to  create  our  great  manufac- 
turing plants,  and  now  we  are  about  to  pay  the  interest  on 
the  capital  loaned  to  us,  and  after  awhile  the  principal,  not 
with  raw  materials  and  food  products,  but  with  manufac- 
tures of  iron  and  steel,  with  textile  fabrics  and  with  finished 
articles  of  all  kinds. 

We  shall  do  this  because  in  the  near  future  we  shall  be 
better  able  to  spare  finished  products  of  manufacture  than 
our  raw  materials,  which  we  will  find  it  more  profitable  to 
work  up  than  to  ship,  or  our  food  stuffs,  which  we  will  need 
to  feed  our  constantly  increasing  army  of  workingmen. 
In  the  development  of  the  cheap  loaf  theory  the  Cobdenite 
lost  sight  of  the  fact  that  in  the  last  analysis  bread  must  be 
cheaper  near  the  wheat  field  than  it  can  possibly  be  in  a 
country  that  derives  its  supplies  from  fields  three  thousand 
or  more  miles  distant  from  the  consumer.  So  intent  were 
the  followers  of  the  Manchester  school  upon  promoting 
cheapness  that  they  ignored  the  possibility  of  the  condition 
inuring  more  to  the  benefit  of  the  foreigner  than  to  English- 
men. That  this  was  not  the  object  of  the  Cobdenites  we 
may  be  assured,  for  after  all  that  is  said  and  written  on  the 
subject  we  are  forced  to  believe  that  the  true  aim — and  nat- 
ural enough  it  was  that  it  should  have  been  so — of  intelligent 
British  free  traders  was  to  promote  the  interests  of  the 
United  Kingdom.  Britons  were  to  be  the  chief  beneficiaries 
of  the  policy ;  others  would  share  in  the  benefits,  they  said, 
and  many  of  them  no  doubt  believed  this,  but  outsiders, 
in  most  English  minds,  were  merely  to  be  hangers-on  to  the 
fringe  of  British  prosperity. 

The  failure  of  the  rest  of  the  world  to  accept  a  secondary 
role  has  destroyed  all  the  calculations  of  the  Cobdenites. 
The  tenacious  adherence  of  Americans  to  the  idea  that  it  is 
the  part  of  wisdom  to  develop  all  the  resources  of  their 
country,  by  calling  into  existence  a  vast  manufacturing 
industry,  has  raised  up  an  enormous  and  constantly  increas- 
ing mass  of  consumers,  who  are  rapidly  reaching  a  stage 


TRIUMPH  OF  PROTECTION  565 

when  they  will  outbid  foreigners  and  make  it  impossible 
for  the  latter  to  buy  the  products  of  American  soil.  This 
is  merely  another  way  of  stating  the  economic  probability 
that  in  the  near  future  the  American  consumption  of  raw 
and  food  products  of  the  United  States  will  be  abreast  of 
production.  The  prediction  has  been  frequently  made  re- 
cently that  in  a  very  few  years  the  population  of  the  United 
States  would  be  sufficiently  great  to  absorb  the  wheat  crop 
of  the  country,  and  it  deserves  respectful  attention,  because 
it  is  based  on  careful  calculations  which  take  into  consid- 
eration all  the  possibilities  of  increased  tillage  and  improved 
methods  of  culture.* 

When  the  time  arrives  to  which  Davis  and  others  who 
have  studied  this  phase  of  economics  look  forward,  the  em- 
barrassments under  which  Great  Britain  labors  as  a  manu- 
facturing country  will  be  increased  to  such  an  extent  that 
competition  and  the  preservation  of  the  British  home  trade 
will  be  entirely  out  of  the  question.  It  will  then  be  more 
profitable  for  the  British  owners  of  capital  to  receive  what 
is  due  them  from  Americans  in  the  form  of  manufactured 
goods  rather  than  rude  products,  because  it  will  no  longer  be 
possible  for  England  to  manufacture  in  competition  with 
the  country  which  has  raw  materials  and  food  supplies  at 
its  doors.  Then  the  cheaper  loaf  and  the  cheaper  raw  ma- 
terials of  the  United  States  will  play  their  part  in  giving 
to  this  country  commercial  precedence  over  England. 

That  the  conditions  which  will  bring  about  this  change 
have  been  operating  for  some  time  will  be  inferred  from 
facts  which  have  been  adduced  elsewhere,  but  as  yet  a  mere 
beginning  has  been  effected.  Up  to  this  time  the  United 
States  has  been  able  to  produce  immense  quantities  of  food 
stuffs  which  hdr  people  have  been  unable  to  consume,  and 


♦Davis,  New  York  Sun,  May  6,  1894;  same  author,  Forum,  Octo- 
ber, 1897;  also  address  of  Professor "Crookes,  opening  of  the  British 
Association;  Warren  in  Westminster,  January,  1899,  article,  '"The 
United  States  Export  Trade." 


566         PROTECTION  AND  PROGRESS 

her  manufacturing  requirements  have  made  no  serious 
draft  upon  the  domestically  produced  raw  material  of  the 
most  widely  used  textile  of  modern  times.  But,  as  is  now 
clearly  seen,  there  will  be  a  rapid  change  in  the  near  future 
which  will  result  in  the  absorption  of  our  food  supplied  by 
domestic  consumers,  and  our  raw  cotton  will  be  worked  up 
in  American  factories.  Concurrently  with  the  development 
of  the  latter  industry  we  may  reasonably  expect  to  witness 
the  expansion  of  the  manufacture  of  what  may  be  termed 
fine  machinery  and  tools  and  instruments  of  precision,  which 
has  already  gained  considerable  importance,  as  the  tables 
of  American  exports  show. 

In  1897  there  were  shipped  to  foreign  countries  type- 
writing machines  to  the  value  of  $1,902,153;  bicycles, 
$6,846,529;  sewing  machines,  $3,136,364,  and  scientific  and 
electrical  instruments  to  the  amount  of  $2,770,803.*  When 
these  figures  are  supplemented  with  the  statement  that  nearly 
one-thiird  of  the  $14,655,849  which  the  above  items  aggre- 
gate was  shipped  to  Great  Britain  the  significance  of  the 
trend  will  be  apprehended. 

That  this  is  not  a  temporary  manifestation  of  energy 
on  the  part  of  Americans  which  British  manufacturers  may 
hope  to  see  abated,  or  the  outlet  foir  it  diverted  in  some 
other  direction,  is  recognized  by  competent  English  trade 
critics,  who  frankly  admit  the  difficulties  which  confront  their 
countrymen  and  no  longer  attempt  to  delude  themselves 
with  the  worn-out  Cobdenite  sophistry  that  protectionist 
countries  must  find  it  impossible  to  compete  with  a  free 
trade  nation  like  England  because  of  the  assumed  dear  con- 
dition which  the  protection  policy  is  supposed  to  bring  about. 
The  true  situation  is  now  perceived  and  leading  journals 
devoted  to  special  and  general  trade  interests  in  England 
openly  admit  that  the  competition  of  protective  America  is 
to  be  dreaded.*      The  Hardware    Record    (London)    said 

♦Report  of  Bureau  of  Statistics,  Treasury  Department,  1898. 


TRIUMPH  OF  PROTECTION 


567 


in  1898:  "Great  Britain  will  have  to  make  up  its  mind  to 
see  a  good  deal  more  of  the  American  in  our  markets  than 
has  been  the  case  hitherto.  Trade  is  so  good  in  the  States 
at  present  that  all  the  available  productive  power  is  required 
for  home  demands,  but  several  manufacturer  friends  who 
have  just  returned  from  the  States,  where  they  have  been  on 
business  tell  our  Sheffield  correspondent  that  manufacturers 
there  are  so  largely  increasing  their  output  that  they  will 
promptly  overtake  home  requirements  and  enter  vigorously 
upon  European  markets.  'You  will  soon  have  us  over 
amongst  you,'  said  one  large  producer  to  a  Sheffield  manu- 
facturer, 'and  I  will  show  you  several  of  the  lines  in  which 
we  intend  to  do  business.'  These  lines  included  bright 
drawn  steel  and  all  the  cheaper  grades  of  steel,  brass  rods, 
files,  small  malleable  iron  castings,  automatic  machinery  for 
all  purposes,  steam  (India  rubber)  hose  piping  and  other 
goods.  These  were  invariably  from  25  to  50  per  cent  cheaper 
than  the  prices  quoted  in  this  country.  It  will  not  do  to 
say  that  the  quality  is  inferior,  for  at  two  establishments 
in  Sheffield  where  American  articles  are  being  used  in  in- 
creasingly large  quantities  the  workmen  prefer  both  the 
raw  steel  and  brass  suitable  for  working  automatic  ma- 
chines, and  also  the  files  and  the  malleable  iron  castings.  It 
is  quite  clear  that  American  competition  is  going  to  be  far 
more  severe  than  it  is  at  present."' 


♦united  states  imports  and  exports  of  manufactured 

ARTICLES. 

Year.    Imports. 

Exports.  1 1 

Year.    Imports. 

Exports. 

1880 

•  •  .$268,333,432 

$102,856,015  II 

1890. 

.  .$346,638,654 

$151,102,376 

1881 

.  .  .  284,763,615 

114,233,219  II 

1891. 

.  .  368,225,181 

168,927,315 

1882 

. .  .  322,036,663 

134,794.346  II 

1892. 

.  .  316,092,469 

158.510,937 

1883 

...  337,264.528 

134,228,083  II 

1893. 

.  .  356,866,396 

158,023,118 

1884 

•  •  •  304.352,393 

136,372,887  II 

1894. 

•  •  234,139,173 

183,728,808 

1885 

•  •  •  265,704.352 

147,187,527  II 

1895- 

•  •  317,257,176 

183,595,748 

1886 

. . .  285,050,564 

136,541.978  II 

1896. 

•  •  328,937,528 

288,571,178 

1887 

. .  .  306,030,440 

136,735,105  il 

1897. 

.  .  327,324,920 

277.285,391 

1888 

.  .  .  324,823,601 

130.300,087  II 

1898. 

.  .  226,212,635 

291,208,358 

1889 

. .  .  328,629,989 

138,675,507  11 

568         PROTECTION   AND   PROGRESS 

The  testimony  of  this  journal  respecting  the  esteem  in 
which  American  manufactured  articles  is  held  by  British 
workingmen  may  be  supplemented  from  a  hundred  other 
sources  and  is  abundantly  corroborated  by  the  statistics  of 
exports  of  American  edged  and  other  tools  to  England, 
where  they  are  rapidly  superseding  the  more  cumbrous 
articles  produced  in  British  factories,  their  handiness  and 
cheapness  causing  the  demand  for  them  to  continually  in- 
crease. The  growing  export  trade  in  such  intricate  ma- 
chines as  locomotives  is  strong  testimony  to  our  ability  to 
manufacture  and  sell  more  cheaply  than  any  of  our  compet- 
itors. A  writer  who  recently  discussed  the  favor  accorded 
American  machinery  by  foreigners  says  "the  principal  de- 
mand for  American  locomotives  for  export  lies  in  the  rela- 
tive cheapness  of  our  engines  and  their  adaptation  to  the 
conditions  of  the  roads  on  which  they  are  to  be  used.  An 
American  firm  not  long  ago,"  he  adds,  "submitted  figures 
on  a  locomotive  the  specifications  for  which  were  prepared 
in  England,  and  it  was  found  that  they  could  turn  out  for 
$10,000  work  which  in  England  would  cost  $14,000.  This 
improvement  is  brought  about  partly  by  improvements  in 
factory  methods  and  partly  by  degrees  of  finish.  *  *  * 
As  against  nine  or  twelve  months  required  by  English  oir 
German  shops  to  turn  out  a  finished  engine,  American  works 
rarely  require  more  than  two  months,  and  large  engines 
complete  in  every  detail  have  been  turned  out  in  four  weeks 
on  rush  orders."* 

Details  such  as  these  might  be  multiplied  indefinitely, 
but  enough  have  been  supplied  to  clearly  establish  the  fact 
that  the  invasion  of  foreign  countries,  and  particularly  of 
Great  Britain,  by  our  manufacturers  is  proceeding  rapidly, 
and  that  the  process  is  likely  to  be  accelerated  rather  than 
retarded  in  the  future.  Not  only  has  the  unprotected  Brit- 
ish toiler  to  dread  the  competition  from  this  side  of  the 


♦Commercial  Advertiser,  New  York,  January,   1898. 


TRIUMPH  OF  PROTECTION  569 

water — the  effectiveness  of  which,  for  the  present  at  least, 
depends  almost  wholly  upon  accessibility  to  cheap  and  abun- 
dant supplies  of  raw  materials,  the  control  of  an  enormous 
home  market,  and  a  remarkable  adaptability  on  the  part  of 
American  workingmen  which  make  the  use  of  automatic  and 
other  labor-saving  devices  come  easy — he  has  also  to  reckon 
with  the  near-at-hand  continental  populations  and  their 
lower  wages  based  on  a  lower  standard  of  living,  which  will 
probably  not  be  materially  raised  without  correspondingly 
lowering  that  of  the  English  workingmen. 

What  the  result  will  be  when  the  English  workingman 
(realizes  the  cause  of  the  pinch  to  which  he  is  subjected  will 
soon  be  disclosed.  Mr.  Mallock,  by  indirection  at  least, 
assumes  that  the  solution  of  the  difficulty  will  be  a  volun- 
tary emigration  or  enforced  deportation  of  the  surplus 
population,  the-  implication  being  that  the  free  emigrants 
would  be  people  who  found  themselves  unable  to  earn  a 
living  on  British  soil,  but  who  still  possessed  enough  means 
to  remove  themselves  to  another  and  less  congested  country. 
But  there  is  a  contingency  which  Mallock  and  others  who 
have  studied  the  subject  from  the  free  trade  point  of  view 
have  overlooked,  but  which  does  not  seem  improbable  when 
all  the  circumstances  are  taken  into  consideration.  It  is  not 
unreasonable  to  suppose  that  the  sentiment  which  finds  ex- 
pression in  such  a  book  as  "Made  in  Germany"  may  grow  to 
such  an  extent  that  the  English  masses  may  insist  upon  the 
imposition  of  a  protective  tariff  which  will  have  the  effect 
of  restraining  the  large  and  growing  imports  of  manufac- 
tured goods  into  Great  Britain. 

Such  a  demand,  if  once  urged  in  earnest  by  English 
workingmen,  cannot  well  be  met  by  stale  arguments  in  favor 
of  the  cheap  loaf.  Such  appeals  may  be  replied  to  by  a 
demand  for  the  retention  of  the  free  loaf,  accompanied  by 
insistance  upon  the  necessity  of  highly  taxing  those  things 
which  are  more  largely  consumed  by  the  well-to-do  classes. 


570  PROTECTION  AND  PROGRESS 

If  their  manufacture  is  to  be  continued  in  England  this 
course  must  be  pursued. 

There  will  be  no  lack  of  evidence  to  prove  the  imminence 
and  the  extent  of  the  danger,  but  it  will  be  difficult  to  adjust 
so  delicate  a  matter  as  that  involved  in  deciding  the  ques- 
tion whether  the  manufacturing  industries  of  Great  Britain 
shall  be  allowed  to  perish  or  whether  it  will  be  advisable 
to  place  a  prohibitory  tax  on  the  returns  from  investments 
made  by  Englishmen  in  foreign  lands. 

This  is  the  problem  which  will  confront  Great  Britain, 
and  it  has  some  features  that  make  it  seem  unique,  although 
there  are  facts  related  by  classical  writers  suggesting  that 
Ancient  Rome  suffered  a  similar  experience.  But  whether 
it  is  an  entirely  novel  situation  or  not,  it  must  be  evident 
to  any  one  who  will  give  the  subject  the  attention  it  deserves 
that  in  the  near  future  this  and  some  other  countries  will 
find  it  more  profitable  to  pay  their  obligations  to  English- 
men in  finished  manufactured  products  than  with  raw  ma- 
terials or  supplies  of  food. 

This  proposition  seems  an  elementary  one  when  the 
data  showing  the  enormous  development  of  manufacturing 
countries  which  may  be  counted  as  rivals  of  Great  Britain 
are  considered.  They  exhibit  a  progress  so  much  beyond 
that  made  by  the  United  Kingdom  in  recent  years  that  it 
is  impossible  to  escape  the  conclusion  that  the  future  will 
show  a  still  greater  development,  which,  combined  with  the 
causes  that  must  compel  retrogression  in  England,  will 
make  that  country  take  a  position  commensurate  with  her 
area  and  present  resources.  These  data  will  also  show  what 
we  have  sought  to  make  clear  in  these  pages — that  the  ex- 
traordinary efiforts  resorted  to  by  protective  nations  to  share 
the  prosperity  enjoyed  by  Great  Britain,  which  resulted  from 
the  advanced  condition  of  her  manufacturing  industry  at  a 
time  when  the  world  felt  the  reviving  influence  of  the 
gold  discoveries  in  California  and  Australia,  have  ma- 
terially benefited  mankind  by  widely  diffusing  the  advan- 


TRIUMPH  OF  PROTECTION  571 

tages  of  accessibility  to  the  workshop,  thus  stimulating  the 
consumption  of  articles  the  use  of  which  would  have  been 
greatly  restricted  had  the  people  of  the  world  remained 
dependent  upon  the  British  for  their  supplies  of  manufac- 
tured goods. 

The  student  of  economics,  keeping  in  mind  the  axiomatic 
statement  of  Smith  that  a  great  quantity  of  rude  products 
is  always  exchanged  for  a  very  small  quantity  of  manu- 
factured articles,  will  without  difficulty  apprehend  the  force 
of  the  figures  which  show  that  in  1840  the  ^otal  value  of 
minerals  mined  throughout  the  world  was  £31,500,000,  and 
that  in  1894  it  had  increased  to  £302,000,000,  while  the 
number  of  tons  of  minerals  raised  had  increased  during  the 
period  from  56,200,000  in  the  first  named  to  746,000,000 
in  the  last  named  year.  It  would  be  superfluous  to  enter 
into  elaborate  calculations  to  determine  the  increase  in  per 
capita  consumption  during  this  interval,  because  the  average 
would  not  truly  represent  the  changed  conditions,  as  so  many 
nations  have  utterly  neglected  the  development  of  their 
resources.  But  it  is  necessary,  in  order  to  correctly  convey 
what  this  tremendous  increase  signifies  to  the  people  who 
assisted  in  promoting  it,  to  show  that  since  1840  nations 
whose  people  were  insignificant  consumers  of  iron  in  that 
year  have  brought  their  consumption  abreast  of  that  of 
Great  Britain.  The  United  States  is  perhaps  the  most 
conspicuous  example  of  this  remarkable  change.  In  1830, 
according  to  the  best  available  statistics,  the  consumption 
of  iron  in  this  country  was  35  pounds ;  in  1850  it  was  56 
pounds ;  in  1870  it  had  increased  to  100  pounds ;  in  1898  it 
will  nearly  reach  350  pounds. 

The  statistician  Michael  Mulhall,  upon  whom  we  chiefly 
depend  in  this  resume  because  he  will  not  be  suspected  of 
protectionist  bias,  his  work  being  authoritative  in  free  trade 
England,  tells  us  that:  "The  production  of  iron  in  the 
United  States  multiplied  exactly  fiftyfold  between  1830 
and  1890,  amounting  in  the  latter  year  to  9,200,000  tons, 


572         PROTECTION  AND  PROGRESS 

a  quantity  far  in  excess  of  the  production  of  any  other 
country."*  But  this  does  not  bring  into  reHef  the  fact  we 
wish  to  emphasize  half  so  strongly  as  his  additional  state- 
ment that  the  production  of  iron  ore,  which  amounted  to  only 
6,400,000  tons  in  1840,  in  1894  had  reached  53,000,000 
tons,  the  gains  of  the  different  nations  being  as  follows : 

Tons,  1840.  Tons,  1894. 

Great  Britain   3,500,000  12,400,000 

United  States  500,000  17,000,000 

Germany    400,000  12,400,000 

Other  states   2,000,000  1 1,200,000 

Total   6,400,000        53,000,000 

The  reader  who  will  recall  the  circumstances  related 
in  another  chapter,  that  whenever  an  extraordinary  demand 
for  iron  asserted  itself  during  the  period  when  the  United 
States  and  other  countries  were  wholly  dependent  upon 
England  for  their  supplies  of  that  metal  the  manufacturers 
of  the  latter  country  immediately  advanced  prices  to  an 
almost  prohibitory  point,  will  at  once  perceive  that  the 
enormous  consumption  now  noted  is  chiefly  due  to  the 
growth  of  the  iron  industry  in  countries  that  resorted  to 
protection.  It  is  possible  that  England,  in  the  event  of  the 
failure  of  these  new  rivals  to  develop  a  home  manufacture, 
might  have  increased  her  output  of  iron  to  a  greater  extent 
than  she  has  since  being  subjected  to  the  rivalry  spoken  of, 
but  it  is  apparent  that  the  increase  of  the  world's  product 
would  have  been  comparatively  slow  without  the  assistance 
of  the  United  States  and  Germany. 

As  has  been  shown  elsewhere,  even  at  her  present  rate 
of  pigiron  production  England  is  compelled  to  depend  largely 
upon  Spain  and  Sweden  for  ores,  a  necessity  which  would 
have  hampered  the  extension  of  the  industry,  not  to  speak 
of  the  waste  that  would  have  been  incurred  in  hauling  the 
raw  material  to  points  where  the  natural  facilities  are  not 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


TRIUMPH  OF  PROTECTION  573 

much  better  for  the  manufacture  of  iron  than  in  the  countries 
from  which  the  ores  are  obtained.* 

While  the  progress  of  the  rivals  of  Great  Britain  has 
not  been  uniform  in  all  branches  of  manufacturing  industry, 
it  has  been  sufficiently  pronounced  in  every  field  to  demon- 
strate beyond  the  possibility  of  doubt  that  it  will  be  impossi- 
ble for  the  British  under  any  circumstances  to  retain  a 
monopoly  in  any  line.  In  1840,  according  to  Mulhall,  the 
value  of  the  world's  output  of  manufactures  was  ii,8io,- 
000,000;  in  1894  this  value  was  increased  to  £5,518,000,000. 
These  totals  are  not  nearly  so  striking,  however,  as  the 
details,  which  show  that  while  the  United  Kingdom  increased 
her  output  in  the  latter  over  the  former  year  by  £489,000,000, 
her  rivals  advanced  from  a  production  of  £1,432,000,000 
in  1849  to  £4,642,000,000  in  1894,  an  increase  of  £3,219,- 
000,000,  or  nearly  sevenfold  as  much  as  the  British  increase 
of  output  during  the  same  period.  In  1840  the  manufactured 
products  of  the  United  States  were  only  valued  at  £96,000,- 
000;  in  1894  they  reached  the  astonishing  value  of  £1,952,- 
000,000,  an  output  twice  as  great  as  that  of  the  United 
Kingdom. 

A  specially  significant  feature  of  these  changes  is  the 
fact  that  Great  Britain  showed  an  expansion  of  output 
t)etween  1840  and  i860  amounting  to  £190,000,000,  against 
an  increase  of  only  £105,000,000  in  Germany  during  the 
same  period.  Between  i860  and  1894,  however,  while  the 
British  increase  was  £299,000,000,  that  of  Germany  was 
nearly  as  great,  the  addition  of  output  for  the  latter  being 
£280,000,000.  In  the  first  period  Great  Britain  gained 
£85,000,000  more  than  Germany;  in  the  second  period  her 
gain  exceeded  that  of  Germany  only  £19,000,000.  The  gain 
of  the  United  States  between  1840  and  i860  was  £296,000,- 
000 — less  than  double  the  British  gain;  but  in   1894  the 

*J.  Stephen  Jeans  has  recently  stated  that  the  severe  competition 
in  the  iron  trade  may  induce  capital  to  consider  the  propriety  of  estab- 
lishing rolling  mills,  etc.,  in  the  vicinity  of  the  Spanish  deposits  of  ores. 


574         PROTECTION  AND  PROGRESS 

United  States  exhibited  an  increase  over  i860  of  £1,562,000,- 
000,  or  five  times  as  large  an  addition  to  her  production 
as  England  had  made  during  the  same  twenty-four  years. 

It  seems  a  work  of  supererogation  to  point  out  that  this 
phenomenal  diffusion  of  industries  between  the  years  1840 
and  1894  must  have  effected  a  great  change  in  the  habits 
of  life  of  the  people  most  directly  affected  by  it.  The 
curious  inquirer,  if  he  examines  into  the  matter,  will  find 
during  the  earlier  years  of  the  fifty-four  under  review  that 
the  consumption  of  manufactured  articles  in  Great  Britain 
was  enormously  in  excess  of  that  of  any  other  country. 
Observers  of  the  fact  have  explained  it  by  assuming  that 
the  greater  wealth  of  the  English  enabled  them  to  consume 
more  abundantly  than  others,  but  they  have  avoided  dwell- 
ing on  the  causes  which  promoted  accumulation  and  per- 
mitted a  concurrent  high  expenditure.  These  causes  have 
been  explained  at  length  elsewhere;  therefore  it  is  only 
necessary  to  make  passing  allusion  to  them  here  and  to 
state  that  when  Americans  were  unprovided  with  an  iron  and 
steel  industry  commensurate  with  their  needs  their  consump- 
tion of  those  metals  was  insignificant  by  comparison  with 
the  quantity  consumed  in  Great  Britain.  As  late  as  1870 
the  average  per  capita  consumption  of  iron  in  the  United 
States  was  100  pounds ;  in  the  same  year  it  was  estimated  to 
be  300  in  Great  Britain.  Since  that  date  the  per  capita 
consumption  of  metallic  products  in  the  United  States  has 
been  increased  to  a  figure  higher  than  that  of  the  United 
Kingdom.  That  result  was  accomplished  by  stimulating  the 
development  of  our  resources  and  by  creating  manufactur- 
ing plants  surpassing  in  magnitude  and  in  productive 
effectiveness  those  of  Great  Britain. 

It  would  be  a  grave  omission  to  fail  to  dwell  on  the 
significant  circumstance  that  when  the  American  consump- 
tion of  manufactured  articles  was  lightest  we  were  pursuing 
the  course  which  all  free  traders  united  in  assuring  us 
would  be  conducive  to  our  greatest  prosperity.     In  1850, 


TRIUMPH  OF  PROTECTION  575 

when  our  consumption  of  pigiron  was  only  56  pounds  per 
capita  per  annum,  against  a  nearly  fivefold  greater  con- 
sumption in  England,  the  United  States  was  famous 
throughout  the  world  for  its  marvelous  agricultural  progress. 
Although  the  accomplishments  of  the  years  preceding  1850 
have  since  been  greatly  surpassed,  there  was  no  question 
raised  during  the  earlier  period  which  suggested  that  Amer- 
icans were  not  making  the  best  possible  use  of  their  soil. 
They  were  bringing  it  under  cultivation  with  such  rapidity 
that  tributes  to  the  energv^  of  the  American  farmer  were 
common  in  the  old  world. 

If  any  particular  period  of  our  agricultural  history  was 
to  be  designated  by  the  economist  as  the  golden  one  he 
would  probably  single  out  that  embraced  in  the  years  between 
1848  and  1857.  But  there  are  facts  which  make  against 
the  accuracy  of  such  an  assumption.  Among  them  are  those 
which  show  that  while  Americans  during  the  years  named 
enjoyed  a  rude  plenty — an  enjoyment  which  was  frequently 
interrupted,  as  we  have  pointed  out  in  other  parts  of  this 
work — they  lacked  many  of  the  comforts  which  had  become 
so  common  in  England,  which  country  was  at  that  time 
the  highest  type  of  an  advanced  manufacturing  community. 

The  slow  progress  in  the  rate  of  general  consumption 
during  these  so-called  years  of  agricultural  prosperity  forci- 
bly illustrates  the  effects  of  the  law  emphasized  by  Smith 
that  a  great  quantity  of  the  rude  products  of  the  soil  or 
the  mines  must  be  exchanged  for  a  very  small  quantity 
of  manufactured  articles.  It  also  warrants  the  conclusion 
that  an  adherence  to  the  policy  recommended  to  us  by  the 
Manchester  school  would  have  resulted  in  a  permanently  low 
rate  of  manufactured  articles  in  the  United  States.  Any 
advantage  that  might  have  resulted  from  the  exclusive 
devotion  of  Americans  to  agriculture  must  have  been  reaped 
by  the  manufacturing  countries  of  the  old  world. 

No  careful  student,  in  the  face  of  the  figures  of  the 
world's  progress  in  manufacturing  since    i860,  and  espe- 


576         PROTECTION  AND   PROGRESS 

cially  those  illustrating  the  advance  of  the  United  States, 
will  venture  to  assert  that  the  condition  which  Mulhall 
says  existed  in  1888,  when  the  value  of  textile  fabrics  con- 
sumed in  Europe  was  $5.95  per  capita  per  annum,  as  against 
$11.40  per  capita  per  annum  in  the  United  States,  could  have 
been  brought  about  had  this  country  restricted  its  energies 
to  the  development  of  agriculture.  Nor  would  he  care  to 
express  the  belief  that  if  Great  Britain  had  retained  her 
overwhelming  preponderance  in  the  cotton  manufacturing 
industry  the  60,000,000  people  living  in  the  United  States 
in  the  year  mentioned  would  have  been  able  to  consume  more 
cotton  fabrics  than  the  120,000,000  inhabitants  of  the  United 
Kingdom,  France  and  Germany.* 

In  whatever  aspect  we  view  the  enormous  changes  in 
rates  of  consumption  we  are  compelled  to  recognize  that 
they  are  chiefly  due  to  the  artificial  stimulus  given  to  pro- 
duction by  nations  which,  according  to  the  theories  of  the 
Cobdenites,  would  have  been  more  profitably  employed  in 
promoting  the  development  of  their  agricultural  resources. 
Doubtless  there  have  been  inventions  which  have  contributed 
to  the  result,  but  the  fact  must  not  be  lost  sight  of  that 
the  most  far  reaching  of  all  the  devices  tending  to  increase 
the  ability  of  man  to  produce  antedate  the  abrogation  of  the 
corn  laws,  and  that  a  great  number  of  the  most  valuable 
labor-saving  contrivances  owe  their  existence  wholly  to  the 
high  rate  of  compensation  demanded  by  workingmen  in 
protective  countries,  which  has  compelled  employers  to  avail 
themselves  of  every  possible  opportunity  to  substitute  auto- 
matic machinery  in  the  place  of  human  energy.  If  we 
compare  the  progress  made  in  manufacturing  during  the 
seventy-five  years  preceding  the  repeal  of  the  corn  laws 
with  that  made  since  1846  we  will  discover  that  although 
some  of  the  most  revolutionary  inventions  fall  within  the 
first  period  the  advances  made  were  feeble  compared  with 

*Mulhall,  Dictionary  of  Statistics. 


TRIUMPH  OF  PROTECTION  577 

the  vigorous  forward  strides  of  the  last  quarter  of  a  century 
during  which  protection  has  had  its  greatest  development. 

It  is  sometimes  contended  by  the  free  trader  that  the 
extraordinary  increase  of  consumption  which  has  been  so 
marked  a  feature  of  recent  years  is  more  particularly  due  to 
the  extension  of  external  transportation  facilities  than  to 
any  other  cause.  That  the  result  we  are  discussing  was 
contributed  to  by  enlarging  the  opportunities  of  intercourse 
between  nations  no  one  will  deny,  but  that  it  played  as 
prominent  a  part  as  those  claim  who  assume  that  the  only 
valuable  trade  is  that  which  is  purely  external  in  character 
is  a  fallacy.  This  will  be  recognized  by  anyone  who  will 
note  that  in  the  year  1894,  when  Mulhall  credits  the  United 
States  with  a  domestic  production  of  manufactures  valued 
at  £1,952,000,000,  the  whole  of  the  vast  output  was  practi- 
cally consumed  within  the  borders  of  this  country,  our 
exports  of  wholly  manufactured  articles  in  the  year  named 
being  valued  at  less  than  £40,000,000.  Our  imports  of 
manufactured  products  in  1894  exceeded  the  volume  of 
exports  of  manufactures,  but  during  the  year  1898  American 
exports  of  manufactured  articles  exceeded  its  imports  of 
manufactured  articles. 

The  reasonable  inference  from  this  showing  is  that  the 
great  increase  of  consumption  of  manufactured  articles 
which  this  country  has  witnessed  during  recent  years  is 
due  to  the  bringing  together  of  workshop  and  farm.  The 
proximity  of  the  two  proved  conducive  to  the  expansion  of 
demand.  The  facilities  for  purchasing,  so  greatly  multiplied 
in  the  cities,  induce  people  to  buy  who  would  not  do  so  if 
the  wares  were  not  easily  obtainable.  In  the  same  way  the 
presence  in  a  country  of  iron  and  steel  works  or  of  textile 
factories  promotes  the  consumption  of  their  products. 

The  influence  of  the  factor  of  proximity  can  hardly  be 

overestimated.     In  an  interesting  discussion  of  the  causes 

which     conspired  for  a  long  time  to  keep  the  American 

consumption  of  sugar  at  a  very  low  per  capita  average,  the 
37 


578        PROTECTION  AND  PROGRESS 

writer  for  an  English  trade  circular  pointed  out  that  it  was 
chiefly  due  to  the  inaccessibility,  of  supplies.  He  was  led 
to  this  conclusion  by  the  observation  of  the  fact  that  in 
recent  years,  since  the  more  complete  penetration  of  all  parts 
of  the  country  by  transportation  lines,  the  consumption 
had  increased  with  great  rapidity.*  The  force  of  his  argu- 
ments cannot  be  minimized  by  reference  to  the  recent  great 
cheapening  in  the  price  of  the  commodity  mentioned,  for 
he  produces  abundant  evidence  to  show  that  the  movement 
in  the  direction  of  increased  per  capita  consumption  was 
more  marked  before  the  removal  of  the  American  duty  on 
sugar  than  afterward.  And  his  observation  is  corroborated 
by  the  fact,  which  he  noted  later,  that  the  consumption  of 
sugar  in  the  United  States  fell  from  2,012,729  tons  in  1894 
to  1,945,406  tons  in  1895,  although  the  latter  year  showed  a 
lower  range  of  price  than  the  former.+ 

That  the  cheapness  of  a  commodity  affects  its  consump- 
tion no  one  will  deny,  but  that  there  are  other  factors  which 
operate  powerfully  must  also  be  admitted.  We  have  the 
authority  of  an  American  free  trade  paper  of  great  promi- 
nence for  the  statement  that  the  American  people  do  not 
object  to  high  prices  when  industry  is  flourishing.  The 
writer  said  :  "The  records  of  the  rise  in  wheat  make  pleasant 
reading.  High  wheat  makes  high  flour,  and  that  makes 
dear  bread,  but  none  seems  to  be  thinking  of  that.  The 
all  but  universal  sentiment  is  satisfaction  in  any  legitimate 
condition  of  the  markets  that  will  help  the  farmers."!  There 
is  no  necessity  for  inquiring  into  what  prompted  this  ad- 
mission. That  it  expressed  the  sentiment  of  the  American 
people  at  the  time  the  paragraph  was  written  is  indisputable. 
It  reflects  the  feeling  entertained  at  all  times  in  this  country 
that  nominal  prices  cut  no  figure  in  the  determination  of 
the  standard  of  living  of  the  working  classes.    Americans 

♦Willett's  and  Gray's  Statistical  Review,  London,  1894. 

flbid,  1896. 

t  Harper's  Weekly,  December  11,   1896. 


TRIUMPH  OF  PROTECTION  579 

are  agreed  that  things  are  only  cheap  when  the  toiler  can 
obtain  them  and  that  they  are  dear  when  they  are  out  of 
his  reach,  no  matter  how  apparently  abundant  they  may  be 
or  how  low  the  price  mark  oil  them  is. 

That  the  condition  of  accessibility  has  been  produced 
by  the  protective  policy  in  this  country  and  that  the  system 
has  operated  to  bring  about  a  similar  result  in  Germany, 
on  a  less  pronounced  scale  perhaps,  has  been  amply  demon- 
strated in  these  pages.  That  it  will  be  more  largely  devel- 
oped as  the  wasteful  tendencies  of  external  trade  are 
diminished  by  the  force  of  circumstances  there  is  every 
reason  to  believe.  If  the  rate  of  progress  toward  self 
dependence  which  the  past  quarter  of  a  century  has  witnessed 
is  maintained,  it  is  obvious  that  in  the  near  future  there 
will  be  a  material  abridgment  of  the  unnecessary  hauling 
to  and  fro  which  has  heretofore  characterized  what  is  known 
as  foreign  trade,  and  a  consequent  saving  of  human  energy 
and  of  the  energy-producing  fuels.  That  mankind  will  be 
a  gainer  from  such  a  change  our  own  ample  experience 
abundantly  illustrates. 

That  in  the  readjustment  of  relations,  or  of  commercial 
relativity,  peoples  that  have  prospered  under  the  wasteful 
system  heretofore  in  vogue  will  suffer  there  is  no  doubt. 
But  the  history  of  the  world  teems  with  stories  of  the  ups 
and  downs  of  nations,  the  most  of  them  traceable  to  commer- 
cial vicissitudes.  No  one  will,  however,  assume  on  that 
account  that  the  changes  were  not  for  the  best.  Looking 
down  the  vista  of  the  past  we  note  the  rise  and  decay  of  the 
Phoenician  cities ;  then  the  disappearance  of  the  mighty 
empire  of  Rome,  whose  downfall  was  as  much  due  to  com- 
mercial rivalry  as  to  any  other  cause,  attracts  our  attention ; 
still  later  we  see  the  Italian  commercial  cities  flourish  and  go 
to  seed,  while  the  seat  of  exchange  is  transferred  from 
the  East  to  the  West.  The  whole  panorama  suggests  the 
blossoming  burgeoning,  fruition  and  decay  of  nations. 

The  marvelous  results  that  followed  upon  the  finding 


58o        PROTECTION  AND  PROGRESS 

of  a  new  route  to  the  Orient  and  the  discovery  of  America 
have  been  so  well  described  by  other  authors  it  would  be 
superfluous  to  recapitulate  them  here.  But  astounding  as 
they  are  when  viewed  from  the  standpoint  of  the  economist, 
who  attributes  them  almost  wholly  to  the  interchange  of 
commodities  between  nations,  the  achievements  of  the  past 
may  easily  be  dwarfed  into  insignificance  if  the  awakening, 
so  confidently  predicted  by  many  observers,  takes  place  in 
the  far  East  and  the  disposition  so  pronounced  in  recent 
years  of  nations  aiming  at  self  dependence  is  accelerated. 

That  there  will  be  no  abatement  of  this  latter  predilec- 
tion we  may  rest  assured.  As  people  grow  in  intelligence 
their  fear  of  phrases  is  lessened.  There  was  a  time  when 
the  Cobdenite  could  divert  sensible  men  from  the  practical 
purpose  of  developing  the  resources  of  this  and  other  coun- 
tries by  talking  about  ''Chinese  walls,"  but  now  the  fact 
is  recognized  clearly  that  the  interposition  of  a  tariff  barrier 
has  not  the  effect  described,  but,  on  the  contrary,  has  a 
tendency  to  promote  a  really  profitable  external  intercourse 
— that  which  results  from  the  exchange  of  articles  of  a  non- 
competing  character.  But,  more  important  than  all,  pro- 
tection develops  the  faculty  which  is  the  greatest  factor 
in  human  progress — self  help.  A  protective  policy,  by  arbi- 
trarily depriving  the  people  of  a  country  of  the  privilege  of 
depending  on  the  people  of  another  country  for  those  things 
which  may  as  well  be  produced  at  home,  performs  a  function 
analogous  to  that  of  the  careful  parent  who  inoculates 
habits  of  self  reliance  in  his  children  and  who  teaches  them 
to  avoid  eflfeminacy  by  compelling  them  to  acquire  the  ability 
to  do  for  themselves.  A  nation  with  undeveloped  industries 
that  accepts  the  doctrines  of  the  free  traders  and  inculcates 
the  idea  of  dependence  on  foreigners  is  sure  to  fill  no  better 
place  in  the  world's  commercial  economy  than  that  singular 
product  of  an  effete  civilization  known  as  a  "dude"  occupies 
among  verile  men. 

It  is  assumed  by  historical  critics  that  the  misfortunes 


TRIUMPH  OF  PROTECTION  581 

of  many  of  the  commonwealths  of  antiquity  may  be  traced 
to  the  pusillanimity  of  the  rich,  but  a  careful  consideration 
of  the  causes  which  led  to  the  undoing  of  some  of  the  most 
conspicuous  examples  suggests  that  it  was  the  vulnerability 
of  the  wealth,  and  not  its  mere  possession,  that  was  respons- 
ible for  the  disaster  which  overtook  so  many  great  nations. 
A  statesmanlike  fear  of  the  consequences  of  an  unstatesman- 
like  economic  policy  may  easily  be  mistaken  for  the  cowardice 
of  wealth.  The  undoubted  aversion  of  most  Britons  for  war 
is  frequently  characterized  as  an  instance  of  the  till  of  the 
shopkeeper  dictating  the  policy  of  the  nation,  but  a  country 
whose  population  demands  a  vastly  greater  quantity  of  food 
than  its  agriculturists  can  supply,  and  whose  manufacturers 
are  dependent  upon  foreigners  for  raw  materials,  must  ever 
be  the  victim  of  apprehensions  of  this  kind.  Empty  ware- 
houses and  granaries  in  such  a  country  are  not  merely  a 
menace  to  wealth;  they  threaten  the  national  existence.  A 
country  like  Great  Britain  must  have  grain  and  other  food 
to  eat,  but  above  all  things  her  people  must  be  permitted 
to  work.  If  their  supplies  of  grain  are  interrupted  they  must 
suffer,  and  if  they  have  no  raw  materials  to  work  up,  want, 
misery  and  starvation  will  be  the  fate  of  many. 

No  such  misfortune  can  hinder  the  career  of  a  nation 
which  steadfastly  adheres  to  a  policy  of  self  sufficiency. 
The  development  of  a  protectionist  country  with  manifold 
resources  results  in  the  accumulation  of  vastly  greater 
stores  of  wealth  than  could  possibly  be  gathered  in  a 
dependent  country,  and,  when  created,  the  wealth  of  a  pro- 
tectionist nation  is  practically  invulnerable.  The  great  man- 
ufacturing plants  of  a  country  of  the  magnitude  of  the  United 
States  are  subject  to  certain  economic  vicissitudes,  but  they 
can  never  be  brought  to  a  standstill  by  a  blockade.  The 
iron  and  steel  mills,  the  textile  factories  and  all  the  great 
staple  industries  of  this  country  would  flourish  if  the  seas 
were  alive  with  the  craft  of  enemies.  No  fear  of  empty 
granaries  or  apprehension  of  a  cotton  famine  would  conspire 


582        PROTECTION  AND  PROGRESS 

to  prevent  the  assertion  of  national  dignity.  And  while  no 
American  statesman  would  court  a  war  with  a  foreign  nation 
or  nations  which  would  interrupt  external  commerce,  there 
is  none  who  would  feel  it  incumbent  to  submit  to  national 
insult  to  save  the  whole  of  our  ocean  borne  commerce. 

This  security  has  been  obtained  by  following  the  precepts 
of  Washington,  whose  views  respecting  the  development  of 
the  national  resources  were  shared  by  all  thoughtful  men 
of  his  day.  By  adhering  to  the  principle  of  self  sufficiency 
the  United  States  has  made  itself  the  wealthiest  nation 
on  the  globe.  Undeterred  by  the  assertions  of  the  closest 
economists,  who  taught  that  the  attempt  to  create  a  manu- 
facturing industry  by  artificial  means  in  a  country  of  great 
natural  fertility  would  result  in  diverting  from  agriculture 
the  capital  needed  for  its  development,  thus  impeding 
progress  in  one  direction  and  missing  it  in  the  other,  Amer- 
ican statesmen  have  worked  steadily  toward  the  goal  of 
national  commercial  independence. 

We  have  shown  elsewhere  that  the  prediction  that  it 
would  be  impossible  by  artificial  means  to  call  into  existence 
a  profitable  manufacturing  industry  has  been  falsified,  as 
the  result  of  the  protective  policy  has  been  to  give  us  in 
many  respects  the  most  efficient  manufacturing  plant  in  the 
world.  Mulhall  emphasizes  this  statement  when  he  says  that 
"the  value  of  American  manufactures  is  equal  to  the  value 
conjointly  of  British  and  French  manufactures,"  and  that 
"American  manufactures  have  multiplied  just  twentyfold 
since  1840,  while  those  of  Europe  have  only  doubled."* 

While  this  great  manufacturing  industry  was  in  process 
of  creation  instead  of  diverting  capital  from  the  development 
of  agriculture  there  is  a  consensus  of  opinion  that  the  arti- 
ficial system  of  promoting  manufactures  contributed  more 
to  the  rapid  opening  up  of  the  fertile  lands  of  the  United 
States  than  any  other  cause.    While  British  agriculture  has 

♦Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


TRIUMPH  OF  PROTECTION  583 

been  prostrated,  owing  to  the  policy  of  promoting  one  indus- 
try at  the  expense  of  others,  in  the  United  States  the 
symmetrical  application  of  the  protective  tariff  has  so  enor- 
mously increased  the  output  of  food  and  raw  products  as  to 
practically  revolutionize  the  condition  of  the  masses  of 
workers  throughout  the  world  and  has  incidentally  con- 
vinced the  major  part  of  mankind  that  the  methods  of 
antiquity,  which  might  have  been  pursued  to  the  end  of  all 
time,  could  profitably  be  changed.  By  bringing  field  and 
factory  together  the  farmer  has  been  taught  that  agriculture 
need  not  be  a  stationary  art.  "If  the  economy  of  labor  was 
as  well  understood  in  all  countries  as  in  the  United  States," 
says  Mulhall,  "where  each  hand  cultivates  twenty-one  acres, 
the  tilled  area  of  Europe  would  be  two  and  one-half  times 
as  great  as  it  is."* 

In  the  face  of  such  a  tribute  as  this  and  of  the  testimony 
that  the  value  of  American  farm  products  has  increased 
from  ii8o,ooo,ooo  in  1840  to  £813,000,000  in  1893,  the 
latter  amount  representing  "one-third  of  the  food  product 
of  the  world/'t  no  one  will  venture  to  say  that  the  artificial 
encouragement  of  manufactures  in  the  United  States  has 
retarded  the  expansion  of  agriculture.  While  we  were 
building  up  a  manufacturing  industry  surpassing  in  magni- 
tude that  of  all  other  competitors  "the  growth  of  agriculture 
was  so  great  as  to  be  without  parallel  in  any  age  or  nation." 
In  1840  our  production  of  the  cereals — wheat,  maize  and 
oats — reached  15,400,000  tons;  in  1895  the  product  was 
89,400,000  tons.  "The  grain  crop  of  1895,"  says  Mulhall, 
"was  equal  to  eight  tons  per  hand  employed  in  farming, 
the  average  in  Europe  being  two  tons ;  the  superiority  of  the 
American  agriculturist  being  due  to  improved  machinery."! 

It  would  have  been  extraordinary  if  the  industrial  achieve- 

*Mulhall,  Industries  and  Wealth  of  Nations,   1896. 

flbid. 

fibid. 


584        PROTECTION  AND  PROGRESS 

ments  above  recorded  had  not  enormously  increased  the 
national  wealth  of  the  protected  country.  The  authority  we 
have  drawn  upon  permits  us  to  make  a  resume  of  the  growth 
of  wealth  in  the  United  States  which  is  both  interesting  and 
instructive.     He  thus  presents  the  stages: 

Per 
Year.  Population.         Amount.       capita. 

1850 23,200,000      i  1,486,000,000     £  64 

1870 38,600,000         5,010,000,000        130 

1890 62,600,000        13,550,000,000       216 

189s 69,700,000       16,350,000,000       234 

The  figures  showing  the  expansion  of  British  wealth 
presented  by  Mr.  Mulhall  do  not  permit  the  paralleling  of 
this  table,  but  he  tells  us  that  in  i860  the  wealth  of  Great 
Britain  was  £7,206,000,000  and  that  in  1895  it  had  increased 
to  £1 1,806,000,000.  This  shows  an  increase  of  £4,600,000,000 
in  thirty-five  years,  whereas  the  increase  in  the  United  States 
during  the  twenty-five  years  ending  with  1895  amounted 
to  £11,340,000,000,  the  addition  being  nearly  as  much  as  the 
total  wealth  of  Great  Britain  in  the  last  year  of  the  period."* 

According  to  the  same  authority  the  total  wealth  of  the 
world  in  1894  was  £69,769,000,000,  and  the  United  States 
stands  credited  with  nearly  one-fourth  of  the  whole  amount. 
This  country  may  therefore  be  regarded  as  the  most  extraor- 
dinary exemplar  of  the  magnificent  results  of  self  depend- 
ence, but  it  would  be  a  mistake  to  assume  that  other  protec- 
tionist states  have  not  greatly  increased  their  stores  by  the 
same  methods  as  those  pursued  in  America.  In  1894  France 
was  credited  with  wealth  to  the  amount  of  £9,690,000,000; 
Germany  with  £8,052,000,000  and  Russia  with  £6,452,000,- 
000.  The  latter  country  has  recently  embarked  on  a  career 
which,  if  not  arrested  by  an  unfortunate  war,  must  soon 
place  her  in  the  foremost  rank  of  nations.  Her  illimitable 
resources  are  being  systematically  developed  and  her  prod- 

*Mulhall,  Industries  and  Wealth  of  Nations,  1896. 


TRIUMPH  OF  PROTECTION  585 

ucts  are  steadily  increasing  in  volume  and  value.  The  effects 
of  material  prosperity  are  visible  on  every  hand,  and  the 
creation  of  a  great  manufacturing  industry  promises  to  do 
more  for  the  political  salvation  of  the  empire  than  centuries 
of  revolution  and  nihilism  could  accomplish.  By  diffusing 
the  industrial  arts  throughout  Russia  the  Government  is 
paving  the  way  for  a  more  liberal  system,  which  will  ulti- 
mately give  the  masses  a  voice  in  its  councils.  Thus  the 
protective  system  will  have  had  the  effect  of  increasing 
the  material  prosperity  of  a  people  and  of  securing  their 
political  advancement. 

The  facts  presented  in  the  foregoing  pages  must,  if  prop- 
erly interpreted,  lead  to  the  conclusion  that  the  policy  of 
artificially  stimulating  industries  is  beneficial  to  mankind, 
and  that  none  of  the  injurious  effects  which  Cobdenites 
say  its  adoption  entails  have  been  felt,  simply  because  there 
is  no  foundation  for  the  assumption  that  practical  men  in  any 
country  would  for  any  considerable  period  attempt  to  carry 
on  an  industry  at  a  loss.  The  free  traders  have  erroneously 
assumed  that  protectionists  advocate  acting  in  defiance  of 
nature,  and  have  deliberately  refused  to  recognize  that  the 
eminently  sensible  object  of  protection  is  not  to  impede  pro- 
duction, but  to  cause  those  things  which  may  as  readily 
be  manufactured  or  raised  at  home  as  abroad  to  be  produced 
within  the  national  boundaries.  The  long  history  of  tariff 
legislation  in  the  United  States  may  afford  some  instances 
of  attempts  to  encourage  industries  incapable  of  being  profit- 
ably domesticated,  but  where  one  mistake  may  be  cited  a 
score  of  successes  can  be  set  to  the  credit  of  the  system. 
It  may  be  added  that  when  a  mistake  is  discovered  by  pro- 
tectionists it  is  not  persevered  in. 

Judicious  protection — and  by  that  we  mean  well  consid- 
ered efforts  to  promote  and  maintain  domestic  industries 
in  countries  with  abundant  resources — must  necessarily  work 
as  described  in  these  pages.  It  cannot  help  calling  into 
existence  manufacturing  industries  and  assist  in  maintaining 


586        PROTECTION  AND  PROGRESS 

them  after  they  are  created.  By  so  doing  it  affords  oppor- 
tunities to  the  people  of  a  country  to  find  profitable  employ- 
ment and  to  accumulate  wealth.  But  above  all  things  it  is 
the  great  minimizer  of  waste  energy.  By  bringing  field  and 
factory  together  it  tends  to  the  elimination  of  all  superfluous 
hauling  to  and  fro,  and  thus  cheapens  products  and  makes 
them  more  accessible  to  the  masses  than  they  could  possibly 
be  under  a  system  which  practically  elevates  trade  above 
production.  Cobdenism  has  this  inherent  defect  that  it  con- 
siders the  exchange  of  commodities  as  more  important 
than  their  production.  The  aim  of  protection  is  to  promote 
production  and  to  avoid  waste,  therefore  it  is  the  economic 
policy  that  must  endure. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

This  book  is  DUE  on  the  last  date  stamped  below. 


FormL9 — 15m-10,'48(B1039)444 


I 
i 


UNIVER^^ITY  of  CaUFOK,Ma 

AT 

LOS  ANGELES 

LIBRARY 


HF         Young  - 

1755     Protection  and 

Y85p     progress. 


HF 

1755 

Y85p 


uc 


SOUTHERN  REGIONAL  UBRARYFAC^^^^^^^^^ 


AA    001008  573     6 


